What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-04-17 compared with 2022-03-16 · 871 added, 584 removed, 1340 unchanged (52% of the section changed)

33 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Intangible Assets for Business Acquisitions

Description of the Matter

During the year ended December 31, 2021 the Company completed certain business combinations for net aggregate consideration of approximately $36.3 million.

The transactions were accounted for as business combinations.

Accordingly, the purchase price was allocated, on a preliminary basis, to the assets acquired and liabilities assumed, based on their respective fair values identified including intangible assets with aggregate fair values of approximately $23.5 million.

The Company, with the assistance of third party valuation experts, estimated the fair values of the identified intangible assets using valuation models.

Such valuation models require significant assumptions;

these assumptions are primarily related to the complexity of the valuation models used to measure the fair value as well as the sensitivity of the fair value identified.

The significant assumptions used to estimate the fair value of the identified intangible assets included discount rates, attrition rates, economic lives and financial projections including comparable company specific data.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in our Audit

Our audit procedures related to the forecasts of future cash flows and the selection of certain attrition rates, terminal growth rates and discount rates for the identified intangible assets for the acquired entities included the following:

(1) We assessed the reasonableness of fiscal year 2022 forecasted cash flows of revenues and operating margins by comparing them to the acquired entities actual 2021 cash flows.

(2) We assessed the reasonableness of the forecasted revenue growth rates and operating margins over the cash flow forecast period by comparing them to the acquired entities’ actual revenues and operating margins during the most recent historical period including the Company's marketing plans.

(3) We evaluated the reasonableness of the (a) valuation methodologies;

(b) terminal growth rates by comparing them to industry growth rates;

and (d) discount rates, which included testing the source information underlying the determination of the discount rates, testing the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.

(4) We sensitized the projections and compared them to the valuation reports for reasonableness.

Valuation of Goodwill Impairment

Description of the Matter

The Company evaluates goodwill for impairment annually as of the end of the fourth fiscal quarter by comparing the carrying values of each of the Company’s reporting units to their estimated fair values as of the test dates.

The estimates of fair value of the reporting units are computed using a combination of both an income approach and a market approach.

The Company evaluates its goodwill for impairment annually or when there is an indication that there was an impairment.

The estimates of fair value of the reporting units are computed using a combination of both an income approach and a market approach and the Company's reporting units are higher than the fair value of the fair value of the reporting units.

Under the income approach, the Company utilizes the discounted cash flow method to estimate the fair value of the reporting units.

1 unchanged sentence

The Company selected assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates, management’s plans, and guideline companies.

Under the market approach, fair value is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

Under the market approach, fair value is derived from metrics of publicly traded

companies or historically completed transactions of comparable businesses.

The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services.

The goodwill balance was $21.8 million as of December 31, 2021, of which $21.8 million was allocated to the Indoor Intelligence reporting unit.

As of the measurement date the carrying value of the Indoor Intelligence reporting unit exceeded the fair values as of the measurement date and, therefore, the Company recorded an impairment of $14.8 million.

The goodwill balance was fully impaired as of December 31, 2022.

As of the measurement date the carrying value of the Indoor Intelligence reporting unit exceeded the fair value as of the measurement date and, therefore, the Company recorded an impairment of $7.6 million.

We identified goodwill impairment as a critical audit matter because of the significant estimates and assumptions made by management to estimate fair value given the sensitivity of operations to changes in demand for all reporting units and historical results and long-range strategic plans of the reporting units.

2 unchanged sentences

The primary procedures we performed to address this critical audit matter included the following.

(1) We evaluated the Company’s forecasted revenue (2) Evaluated the guideline companies used operated in a similar industry as the subject reporting unit.

(1) We evaluated the Company’s forecasted revenue (2) Evaluated the guideline companies used and operated in a similar industry as the subject reporting unit.

(3) The guideline companies and transaction appear appropriate (4) The Company used the appropriate modified capital asset pricing model and a weighted average cost of capital.

(5) We sensitized the projections and compared them to the valuation report to materially assess the impact to the reported amount of the impairment.

(6) We evaluated the disclosures in the Company's financial statements for proper reporting.

Valuation of Intangible Asset Impairment

Description of the Matter

Auditing the Company's impairment assessments is complex due to the significant estimation required in determining the recoverable amount, being the higher of the value in use and fair value less costs to sell.

The Company's methodologies for estimating the recoverable value of these assets involve significant assumptions and inputs, including projected financial information for net sales and operating profit by product, all of which are sensitive to and affected by economic, industry, and company-specific qualitative factors.

These significant assumptions and inputs are forward-looking and could be affected by future economic and market conditions.

We gained an understanding of the Company’s process to identify and account for impairment of intangible assets.

The Group performs intangible assets impairment testing whenever events or changes in circumstances indicate that the carrying amount of the cash-generating unit may not be recoverable.

To determine whether an impairment shall be recognized, the carrying amount of a cash-generating unit is compared to its recoverable amount.

If the recoverable amount of the cash-generating unit is less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount, and this reduction is recognized as an impairment loss.

The recoverable amount of a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

The value in use is determined based on the estimated future cash flows and pre-tax discount rate for the cash-generating unit.

The intangible asset balance was $22.3 million as of December 31, 2022.

As of the measurement date the carrying value of the of the intangible assets exceeded the fair values as of the measurement date and, therefore, the Company recorded an impairment of $4.6 million.

How We Addressed the Matter in our Audit

The primary procedures we performed to address this critical audit matter included the following.

(1) We evaluated management’s projected revenues and process for developing the fair value estimates.

(2) We tested the completeness accuracy and relevance of underlying data used in the models.

(3) We evaluated the reasonableness of the assumptions used by management.

(4) We sensitized the projections and compared them to the valuation report to materially assess the impact to the reported amount of the impairment.

(5) We evaluated the disclosures in the Company's financial statements for proper reporting.

/s/ Marcum LLP

We have served as the Company’s auditor since 2012.

March 16, 2022

April 17, 2023

INPIXON AND SUBSIDIARIES

6 unchanged sentences

Accounts receivable, net of allowances of $ 231 and $ 272 , respectively

Notes and other receivables 321 152

Inventory 1,976 1,243

Other receivables 359 321

Inventory, net 2,442 1,976

Short-term investments — 43,125

Note receivable 150 —

Prepaid expenses and other current assets 3,453 4,842

6 unchanged sentences

Intangible assets, net 22,283 33,478

Goodwill 7,672 6,588

Goodwill, net — 7,672

Other assets 210 253

21 unchanged sentences

Series 7 Convertible Preferred Stock - 58,750 shares authorized;

49,250 and — issued and outstanding as of December 31, 2021 and December 31, 2020, respectively.

(Liquidation preference of $ 49,250,000 )

zero and 49,250 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively.

Series 8 Convertible Preferred Stock - 53,197.7234 share authorized;

zero issued and outstanding as of December 31, 2022 and 2021,respectively.

Stockholders’ Equity

13 unchanged sentences

Accumulated deficit ( 314,841 ) ( 250,309 )

Stockholders’ Equity Attributable to Inpixon 81,803 44,639

Non-controlling Interest 1,688 41

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except number of shares and par value data)

Stockholders’ Equity Attributable to Inpixon 32,197 81,803

Non-controlling Interest ( 82 ) 1,688

Total Stockholders’ Equity 32,115 83,491

Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 57,635 $ 156,673

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these consolidated financial statements

INPIXON AND SUBSIDIARIES

10 unchanged sentences

Acquisition-related costs 426 1,248

Impairment of goodwill 14,789 —

Impairment of goodwill and intangibles 12,199 14,789

Amortization of intangibles 5,411 4,467

2 unchanged sentences

Other Income (Expense)

Interest expense, net 1,183 ( 2,426 )

Interest (expense)/income, net ( 673 ) 1,183

Loss on exchange of debt for equity — ( 30 )

Benefit (provision) for valuation allowance on related party loan - held for sale 7,345 ( 2,370 )

Benefit for valuation allowance on related party loan - held for sale — 7,345

Other income/( expense) 692 ( 47 )

1 unchanged sentence

Unrealized loss on equity securities ( 7,904 ) ( 57,067 )

Unrealized loss on equity method investment ( 1,784 ) —

Total Other Income (Expense) ( 9,669 ) 1,201

2 unchanged sentences

Net Loss ( 66,304 ) ( 70,130 )

Net Income (Expense) Attributable to Non-controlling Interest ( 975 ) 15

Net Expense Attributable to Non-controlling Interest ( 2,910 ) ( 975 )

Net Loss Attributable to Stockholders of Inpixon ( 63,394 ) ( 69,155 )

Accretion of Series 7 preferred Stock ( 4,555 ) ( 8,161 )

Accretion of Series 8 Preferred Stock ( 13,090 ) —

Deemed dividend for the modification related to Series 8 Preferred Stock ( 2,627 ) —

Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock 1,469 —

Amortization premium- modification related to Series 8 Preferred Stock 2,627 —

Net Loss Attributable to Common Stockholders $ ( 79,570 ) $ ( 77,316 )

Net Loss Per Share - Basic and Diluted $ ( 34.12 ) $ ( 51.18 )

INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Weighted Average Shares Outstanding

Basic and Diluted 2,332,041 1,510,678

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these consolidated financial statements

INPIXON AND SUBSIDIARIES

3 unchanged sentences

Net Loss $ ( 66,304 ) $ ( 70,130 )

Unrealized foreign exchange (loss) gain from cumulative translation adjustments ( 617 ) 566

Unrealized foreign exchange gain (loss) from cumulative translation adjustments 1,017 ( 617 )

Comprehensive Loss $ ( 65,287 ) $ ( 70,747 )

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these consolidated financial statements

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Series 7 Preferred Stock Series 8 Preferred Stock Series 4 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2022 49,250 44,695 — — 1 — 1,730,140 2 332,761 ( 1 ) ( 695 ) 44 ( 250,309 ) 1,688 83,491

Stock options and restricted stock awards granted to employees and consultants for services — — — — — — — — 3,656 — — — — — 3,656

Common shares issued for extinguishment of debt — — — — — — 287,802 — 3,650 — — — — — 3,650

Series 8 Preferred Stock issued for cash — — 53,198 41,577 — — — — 5,329 — — — — — 5,329

Accrete Discount - Series 7 Preferred Shares — 4,555 — — — — — — ( 4,555 ) — — — — — ( 4,555 )

Accrete Discount - Series 8 Preferred Shares — — — 13,090 — — — — ( 13,090 ) — — — — — ( 13,090 )

Deemed dividend for the modification related to Series 8 Preferred Stock — — — 2,627 — — — — ( 2,627 ) — — — — — ( 2,627 )

Deemed contribution for the modification related to warrants isued in connection with Series 8 Preferred Stock — — — ( 1,469 ) — — — — 1,469 — — — — — 1,469

Amortization premium - modification related to Series 8 Preferred Stock — — — ( 2,627 ) — — — — 2,627 — — — — — 2,627

Series 7 Preferred Stock redeemed for cash ( 49,250 ) ( 49,250 ) — — — — — — — — — — — — —

Series 8 Preferred Stock redeemed for cash — — ( 53,198 ) ( 53,198 ) — — — — — — — — — — —

Restricted stock grants withheld for taxes — — — — — — ( 12,802 ) — ( 336 ) — — — — — ( 336 )

Common shares issued for CXApp earnout — — — — — — 144,986 — 3,697 — — — — — 3,697

Common shares issued for exchange of warrants — — — — — — 184,153 — — — — — — — —

Common shares issued for net proceeds from warrants — — — — — — 930,990 1 — — — — — — 1

Common shares issued for share rights — — — — — — 52,513 — — — — — — — —

Common shares issued for registered direct offering — — — — — — 253,112 1 14,087 — — — — — 14,088

Cumulative translation adjustment — — — — — — — — — — — 1,017 ( 1,138 ) 1,140 1,019

Net loss — — — — — — — — — — — — ( 63,394 ) ( 2,910 ) ( 66,304 )

Balance - December 31, 2022 — — — — 1 — 3,570,894 $ 4 $ 346,668 ( 1 ) $ ( 695 ) $ 1,061 $ ( 314,841 ) $ ( 82 ) $ 32,115

The accompanying notes are an integral part of these consolidated financial statements

INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (CONTINUED)

(In thousands, except per share data)

Series 7 Preferred Stock Series 4 Convertible Preferred Stock Series 5 Convertible Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Non-Controlling Interest Total Stockholders’ (Deficit) Equity

17 unchanged sentences

Cumulative translation adjustment — — — — — — — — — — — ( 616 ) ( 162 ) 150 ( 628 )

Net loss — — — — — — — — — — — — ( 69,155 ) ( 975 ) $ ( 70,130 )

Balance - December 31, 2021 49,250 44,695 1 — 126 — 124,440,924 $ 124 $ 332,639 ( 1 ) $ ( 695 ) $ 44 $ ( 250,309 ) $ 1,688 $ 83,491

The accompanying notes are an integral part of these financial statements

INPIXON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (CONTINUED)

(In thousands, except per share data)

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance - January 1, 2020 — — 1 — 126 — 4,234,923 4 158,382 ( 1 ) ( 695 ) 96 ( 151,763 ) 26 6,050

Common Shares issued for net cash proceeds of a public offering — — — — — — 33,416,830 33 46,110 — — — — — $ 46,143

Common Shares issued for net cash proceeds from a registered direct offering — — — — — — 5,000,000 5 9,200 — — — — — $ 9,205

Common shares issued for extinguishment of debt — — — — — — 6,863,223 7 9,929 — — — — — $ 9,936

Common shares issued for extinguishment of liability — — — — — — 183,486 — 200 — — — — — $ 200

Common shares issued for net proceeds from warrants exercised — — — — — — 3,000,000 3 — — — — — — $ 3

Stock options granted to employees and consultants for services — — — — — — — — 1,193 — — — — — $ 1,193

Issuance of Ten Degrees Acquisition shares — — — — — — 480,000 1 599 — — — — — $ 600

Cumulative translation adjustment — — — — — — — — — — — 564 — — $ 564

Net income (loss) — — — — — — — — — — — — ( 69,155 ) ( 975 ) ( 70,130 )

10 unchanged sentences

Amortization of right-of-use asset 706 677

Stock based compensation 10,879 1,194

Stock options and restricted stock awards granted to employees and consultants for services 3,656 10,879

Earnout payment expense ( 2,827 ) 6,524

5 unchanged sentences

Provision for inventory obsolescense 10 300

(Recovery) provision for valuation allowance for held for sale loan ( 7,345 ) 2,370

Provision for valuation allowance for related party receivable — 648

Recovery for valuation allowance for held for sale loan — ( 7,345 )

Gain on settlement of related party promissory note — ( 49,817 )

1 unchanged sentence

Unrealized loss on equity securities 7,904 57,067

Impairment of goodwill 14,789 —

Impairment of goodwill and intangibles 12,199 14,789

Loss on disposal of property and equipment 1 24

Realized loss on sale of equity securities 151 —

Unrealized loss on equity method investment 1,784 —

Gain on conversion of note receivable ( 791 ) —

Other 211 235

13 unchanged sentences

Purchase of property and equipment $ ( 245 ) $ ( 346 )

Investment in capitalized software ( 1,019 ) ( 862 )

Purchases of short term investments ( 2,000 ) ( 7,998 )

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Investment in capitalized software ( 948 ) ( 1,019 )

Purchases of short term investments — ( 2,000 )

Sale of short term investments — 2,000

1 unchanged sentence

Sales of treasury bills 43,001 28,000

Sales of equity securities 229 —

Purchases of convertible note ( 5,500 ) —

Issuance of note receivable ( 150 ) —

Investment in Systat licensing agreement — ( 900 )

Purchase of intangible assets — ( 4 )

Acquisition of the Ten Degrees — ( 1,500 )

Acquisition of Nanotron — ( 7,786 )

Acquisition of Intranav — ( 1,023 )

2 unchanged sentences

Acquisition of Visualix — ( 61 )

Investment in long term investment — ( 2,500 )

Cash acquired in the Nanotron acquisition — 311

Net Cash Used in Investing Activities $ ( 53,508 ) $ ( 23,507 )

Net Cash Provided by (Used in) Investing Activities $ 36,387 $ ( 53,508 )

Cash From Financing Activities

Net repayments to bank facility $ — $ ( 150 )

Net proceeds from issuance of preferred stock and warrants 46,906 50,585

Net proceeds from issuance of common stock and warrants — 77,852

Net proceeds from promissory note 12,339 —

Taxes paid related to net share settlement of restricted stock units ( 336 ) ( 1,855 )

Net repayments of notes payable — ( 74 )

Loans to related party — ( 117 )

Repayments from related party — 200

Net proceeds from promissory notes — 5,000

Net proceeds for registered direct offering 14,088 —

Common shares issued for net proceeds from warrants 1 —

Cash paid for redemption of preferred stock series 7 ( 49,250 ) —

Cash paid for redemption of preferred stock series 8 ( 53,198 ) —

Repayment of CXApp acquisition liability ( 5,136 ) ( 461 )

1 unchanged sentence

Repayment of acquisition liability to Locality shareholders — ( 500 )

Net Cash Provided By Financing Activities $ 125,037 $ 57,259

Net Cash (Used in) Provided By Financing Activities $ ( 34,586 ) $ 125,037

Effect of Foreign Exchange Rate on Changes on Cash ( 83 ) 86

Net Increase in Cash and Cash Equivalents 34,484 13,147

Net (Decrease) Increase in Cash and Cash Equivalents ( 32,245 ) 34,484

Cash and Cash Equivalents - Beginning of year 52,480 17,996

4 unchanged sentences

Income Taxes $ 125 $ 2,389

Non-cash investing and financing activities

Common shares issued for extinguishment of liability $ — $ 200

INPIXON AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Non-cash investing and financing activities

Common shares issued for extinguishment of debt $ 3,650 $ 2,500

1 unchanged sentence

Settlement of Sysorex Note $ — $ 7,462

Investment in equity securities $ 58,905 $ —

Common shares issued for Ten Degrees acquisition $ — $ 600

Investment in equity securities through conversion of note receivable $ 6,776 $ 58,905

Common shares issued for CXApp acquisition $ 3,697 $ 10,000

2 unchanged sentences

Preferred shares converted into common shares $ — $ 9,500

The accompanying notes are an integral part of these financial statements

Common shares issued in exchange for warrants $ 14 $ —

The accompanying notes are an integral part of these consolidated financial statements

INPIXON AND SUBSIDIARIES

3 unchanged sentences

Inpixon is the Indoor Intelligence™ company.

Our solutions and technologies help organizations create and redefine exceptional workplace experiences that enable smarter, safer and more secure environments.

We leverage our positioning, mapping, analytics and app technologies to achieve higher levels of productivity and performance, increase safety and security, improve worker and employee satisfaction rates and drive a more connected workplace.

We have focused our corporate strategy on being the primary provider of the full range of foundational technologies needed in order to offer a comprehensive suite of solutions that make indoor data available and meaningful to organizations and their employees.

Our Indoor Intelligence solutions are used by our customers for a variety of use cases including, but not limited to, employee and visitor experience enhancement through a customer branded app with features such as desk booking, wayfinding and navigation, and the delivery of content to tens of thousands of attendees in hybrid events.

Our real time location (RTLS) and asset tracking products offer manufacturing and warehouse logistics optimization and automation, increase workforce productivity, and enhance worker safety and security.

Our solutions and technologies help organizations create and redefine exceptional experiences that enable smarter, safer and more secure environments.

Inpixon customers can leverage our real-time positioning, mapping and analytics technologies to achieve higher levels of productivity and performance, increase safety and security, improve worker and employee satisfaction rates and drive a more connected work environment.

We have focused our corporate strategy on being the primary provider of the full range of foundational technologies needed to form a comprehensive suite of solutions that make indoor data available and actionable to organizations and their employees.

Together, our technologies allow organization to create and utilize the digital twin of a physical location and to deliver enhanced experiences in their current environment and in the metaverse.

Inpixon specializes in providing real-time location systems (RTLS) for the industrial sector.

As the manufacturing industry has evolved, RTLS technology has become a crucial aspect of Industry 4.0.

Our RTLS solution leverages cutting-edge technologies such as IoT, AI, and big data analytics to provide real-time tracking and monitoring of assets, machines, and people within industrial environments.

With our RTLS, businesses can achieve improved operational efficiency, enhanced safety, and reduced costs.

By having real-time visibility into operations, industrial organizations can make informed, data-driven decisions, minimize downtime, and ensure compliance with industry regulations.

With our RTLS, industrial businesses can transform their operations and stay ahead of the curve in the digital age.

Inpixon's full-stack industrial IoT solution provides end-to-end visibility and control over a wide range of assets and devices.

It's designed to help organizations optimize their operations and gain a competitive edge in today's data-driven world.

The turn-key platform integrates a range of technologies, including RTLS, sensor networks, edge computing, and big-data analytics, to provide a comprehensive view of an organizations's operations.

We help organizations to track the location and status of assets in real-time, identify inefficiencies, and make decisions that drive business growth.

Our IoT stack covers all the technology layers, from the edge devices to the cloud.

It includes hardware components such as sensors and gateways, a robust software platforms for data management and analysis, and a user-friendly dashboard for real-time monitoring and control.

Our solutions also offer robust security features to help ensure the protection of sensitive data.

Additionally, Inpixon's RTLS provides scalability and flexibility, allowing organizations to easily integrate it with their existing systems and add new capabilities as their needs evolve.

In addition to our Indoor Intelligence technologies and solutions, we also offer:

• Digital solutions (eTearsheets;

eInvoice, adDelivery) or cloud-based applications and analytics for the advertising, media and publishing industries y advertising management platform referred to as Shoom by Inpixon;

eInvoice, adDelivery) or cloud-based applications and analytics for the advertising, media and publishing industries through our advertising management platform referred to as Shoom by Inpixon;

• A comprehensive set of data analytics and statistical visualization solutions for engineers and scientists referred to as SAVES by Inpixon.

3 unchanged sentences

For Shoom and SAVES we generate revenue from the sale of software licenses.

Note 2 - Summary of Significant Accounting Policies

Change in Segment Reporting

ASC 280, Segment Reporting, establishes standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

During the second quarter of 2021, the Company changed the level of detail at which the Chief Executive Office ("CEO") as the Chief Operating Decision Maker, or "CODM", regularly reviews and manages certain metrics of its businesses The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that it operates and reports in three segments:

Indoor Intelligence, Saves and Shoom.

See Note 28 for further details.

As of December 31, 2021, the Company has a working capital surplus of approximately $ 78.8 million, cash of approximately $ 52.5 million and short term investments of $ 43.1 million.

For the year ended December 31, 2021, the Company incurred a net loss attributable to common stockholders of approximately $ 77.3 million The net loss includes a gain on the settlement of the Sysorex debt with the issuance of the Sysorex securities to the Company on April 14, 2021 offset by the unrealized loss on the related investment in equity securities as of December 31, 2021.

See further details in Note 14 and Note 29.

On each of January 24, 2021, February 12, 2021 and February 16, 2021 the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company sold an aggregate of 15,800,000 shares of its common stock, warrants to purchase up to 44,305,088 shares of common stock at exercise prices ranging from $ 1.55 to $ 2.01 and

Enterprise Apps Spin-off and Business Combination

On September 25, 2022, we entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Inpixon, KINS Technology Group Inc., a Delaware corporation (renamed CXApp Inc., "KINS" or "New CXApp"), CXApp Holding Corp., a Delaware corporation and wholly-owned subsidiary of New CXApp (formerly a wholly-owned subsidiary of Inpixon, "CXApp"), and KINS Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of KINS ("Merger Sub"), pursuant to which KINS would acquire Inpixon's enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the "Enterprise Apps Business") through the merger of Merger Sub with and into CXApp (the “Merger”), with CXApp continuing as the surviving company and as a wholly-owned subsidiary of KINS, in exchange for the issuance of shares of KINS capital stock valued at $ 69 million (the "Business Combination").

Immediately prior to the Merger and pursuant to a Separation and Distribution Agreement, dated as of September 25, 2022, among KINS, Inpixon, CXApp and Design Reactor, Inc., a California corporation ("Design Reactor") (the "Separation Agreement"), and other ancillary conveyance documents, Inpixon would, among other things and on the terms and subject to the conditions of the Separation Agreement, transfer the Enterprise Apps Business, including certain related

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

prefunded warrants to purchase up to 28,505,088 shares of common stock at an exercise price of $ 0.001 per share at purchase prices ranging from $ 1.549 to $ 2.01 per share.

The Company raised net proceeds of $ 77.9 million after deduction of sales commissions and other offering expenses.

On September 13, 2021, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which the Company sold in a registered direct offering (i) 58,750 shares of Series 7 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 47,000,000 shares of common stock.

subsidiaries of Inpixon, including Design Reactor, to CXApp (the "Reorganization").

Following the Reorganization, Inpixon would distribute 100 % of the common stock of CXApp, par value $ 0.00001 , to certain holders of Inpixon securities as of the record date of March 6, 2023 (the "Enterprise Apps Spin-Off").

The Merger closed on March 14, 2023.

Reverse Stock Split

On October 7, 2022, the Company effected a 1-for-75 reverse stock split.

See Note 21 for more details.

All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split.

Note 2 - Summary of Significant Accounting Policies

As of December 31, 2022, the Company has working capital of approximately $ 5.2 million and cash of approximately $ 20.2 million.

For the year ended December 31, 2022, the Company incurred a net loss attributable to common stockholders of approximately $ 79.6 million and net cash used in operating activities during the year ended December 31, 2022 was $ 34.0 million.

During the first quarter of 2022, the Company was required to redeem its Series 7 Preferred Stock for an aggregate amount of $ 49.3 million.

On March 22, 2022, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which it sold in a registered direct offering (i) 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 1,503,726 shares of common stock.

Each share of Series 8 Convertible Preferred Stock and the related warrants were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value of each share of Series 8 Convertible Preferred Stock for an aggregate subscription amount of $ 50.0 million.

1 unchanged sentence

See further breakdown in Note 18 - Capital Raises.

On March 3, 2020, the Company entered into an Equity Distribution Agreement (“EDA”) with Maxim Group LLC (“Maxim”) under which the Company may offer and sell shares of its common stock in connection with an at-the-market equity facility (“ATM”) in an aggregate offering amount of up to $ 50 million, which was increased on June 19, 2020 to $ 150 million pursuant to an amendment to the EDA, from time to time through Maxim, acting exclusively as the Company’s sales agent.

The Company issued 33,416,830 shares of common stock during the year ended December 31, 2020 in connection with the ATM resulting in net proceeds to the Company of approximately $ 46.1 million after deduction of sales commissions and other offering expenses.

The EDA was terminated by the parties on February 12, 2021.

On November 25, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor, pursuant to which it sold in a registered direct offering, 5,000,000 shares of its common stock, and warrants to purchase up to 8,000,000 shares of common stock at an exercise price of $ 1.25 per share (the “2020 Purchase Warrants”) for a combined purchase price of $ 1.25 per share and pre-funded warrants to purchase up to 3,000,000 shares of common stock ("2020 Pre-funded Warrants") at an exercise price of $ 0.001 per share at a purchase price of $ 1.249 per share for net proceeds of $ 9.2 million after deduction of sales commissions and other offering expenses.

Effective October 1, 2022, the holders of Series 8 Convertible Preferred Stock were eligible to redeem their shares.

During the quarter ended December 31, 2022, the Company received cash redemption notices from the holders of the Series 8 Convertible Preferred Stock issued on March 22, 2022, for all of the outstanding shares totaling 53,197.72 shares of Series 8 Convertible Preferred Stock for aggregate cash paid of approximately $ 53.2 million.

On July 22, 2022, the Company entered into a note purchase agreement pursuant to which it agreed to issue and sell to a holder an unsecured promissory note in an aggregate initial principal amount of $ 6.5 million for which in exchange for the note, the company received $ 5.0 million.

Additionally on July 22, 2022, the Company entered into an Equity Distribution Agreement (the "Sales Agreement") under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 25.0 million.

The Company did not make any sales pursuant to the Sales Agreement as of December 31, 2022, however, it has raised gross proceeds of approximately $ 15.4 million under the Sales Agreement during the first quarter of 2023.

On October 18, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 253,112 shares of the Company’s common stock, warrants to purchase up to 3,846,153 shares of common stock at a combined offering price of $ 5.85 per share and pre-funded warrants to purchase up to 2,310,990 shares of common stock at a purchase price of $ 5.849 per pre-funded warrant, with each pre-funded warrant having an exercise price of $ 0.001 per share.

The Company raised net proceeds of $ 14.1 million after deduction of sales commissions and other offering expenses.

On December 30, 2022, the Company entered into a note purchase agreement pursuant to which it agreed to issue and sell to a holder an unsecured promissory note in an aggregate initial principal amount of $ 8.4 million, for which in exchange for the note, the company received $ 6.5 million.

Risks and Uncertainties

1 unchanged sentence

In order to continue our operations, we have supplemented the revenues we earned with proceeds from the sale of our equity and debt securities and proceeds from loans and bank credit lines.

Our business has been impacted by the COVID-19 pandemic and may continue to be impacted.

While we have been able to continue operations remotely, we have and continue to experience supply chain constraints and delays in the receipt of certain components of our products impacting delivery times for our products.

We have also seen some impact in the demand of certain products and delays in certain projects and customer orders either because they require onsite services which could not be performed as a result of compliance with new rules and regulations resulting from the pandemic, customer facilities being partially or fully closed during the pandemic or because of the uncertainty of the customer’s financial position and ability to invest in our technology.

Despite these challenges, including a decline in revenue for certain existing product lines, we were able to realize growth in total revenue for the year ended December 31, 2021 when compared to the year ended 2020, as a result of the addition of new product lines including a full year of sales associated with our SAVES and RTLS product lines, the addition of the CXApp and Game Your Game product lines during the second quarter of 2021 and the addition of the IIoT product line in the fourth quarter of 2021.

The total impact that COVID-19 will have on general economic conditions is continuously evolving and the impact it may continue to have on our results of operations continues to remain uncertain and there are no assurances that we will be able to continue to experience the same growth or not be materially adversely effected.

The Company's recurring losses and utilization of cash in its operations are indicators of going concern however with the Company's current liquidity position, the Company believes it has the ability to mitigate such concerns for a period of at least one year from the date this financial statements were made issued.

Consolidations

The consolidated financial statements have been prepared using the accounting records of Inpixon, Inpixon Canada, Inpixon Germany, Inpixon UK, Nanotron, Intranav, Inpixon India, Game Your Game, and CXApp.

All material inter-company balances and transactions have been eliminated.

While the impact of the COVID-19 pandemic is generally subsiding, the lasting impact on our business and results of operations continues to remain uncertain.

While we were able to continue operations remotely throughout the pandemic, we have experienced supply chain cost increases and constraints

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

and delays in the receipt of certain components of our hardware products impacting delivery times for our products.

In addition, to the extent that certain customers continue to be challenged by the lasting effects of the pandemic, including delays in returning employees to the office, we have and may continue to see an impact in the demand of certain products and delays in certain projects and customer orders.

Certain global events, such as the continued impact of the pandemic, the recent military conflict between Russia and Ukraine, market volatility and other general economic factors that are beyond our control may impact our results of operations.

These factors can include interest rates;

unemployment trends;

the threat or possibility of war, terrorism or other global or national unrest;

political or financial instability;

and other matters that influence our customers spending.

Increasing volatility in financial markets and changes in the economic climate could adversely affect our results of operations.

We also expect that supply chain interruptions and constraints, and increased costs on parts, materials and labor may continue to be a challenge for our business.

While we have been able to realize growth during the year ended December 31, 2022 as compared to the same period in 2021, the impact that these global events will have on general economic conditions is continuously evolving and the ultimate impact that they will have on our results of operations continues to remain uncertain.

There are no assurances that we will be able to continue to experience the same growth or not be materially adversely effected.

The Company's recurring losses and utilization of cash in its operations are indicators of going concern however with the Company's current liquidity position, including the cash raised under promissory notes and under the Sales Agreement subsequent to year end, less the funds required to be contributed with the spin-off of the Enterprise Apps Business, the Company believes it has the ability to mitigate such concerns for a period of at least one year from the date these financial statements are issued.

Consolidations

The consolidated financial statements have been prepared using the accounting records of Inpixon, Inpixon Canada, Inc., Inpixon GmbH, Inpixon Limited, Nanotron Technologies, GmBh, Intranav GmbH, Inpixon India Limited, Game Your Game, Inc., Design Reactor, Inc.

(the CXApp) and Inpixon Philippines, Inc.

All material inter-company balances and transactions have been eliminated.

Use of Estimates

3 unchanged sentences

• the valuation of stock-based compensation;

• the valuation of the assets and liabilities acquired of Sysat, Ten Degrees, Nanotron, Game your Game, Visualix, CXApp, and Intranav as described in Note 4 , Note 5, Note 6, Note 7 , Note 8, Note 9 and Note 10 respectively, as well as the valuation of the Company’s common shares issued in the transaction;

• the valuation of the assets and liabilities acquired of Game your Game, Visualix, CXApp, and Intranav as described in Note 4 , Note 5, Note 6 and Note 7 respectively, as well as the valuation of the Company’s common shares issued in the transaction;

• the allowance for credit losses;

3 unchanged sentences

• impairment of long-lived assets and goodwill;

• useful lives of property, plant and equipment, intangible assets and software development costs.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Business Combinations

12 unchanged sentences

If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted.

The Company has recorded an allowance for credit losses of approximately $ 0.3 million and $ 0.2 million as of December 31, 2021 and 2020, respectively.

The Company has recorded an allowance for credit losses of approximately $ 0.2 million as of December 31, 2022 and 2021.

Finished goods are measured at the cost of manufactured products including direct materials and subcontracted services.

2 unchanged sentences

All other subsidiaries of the Company state inventory utilizing the first-in, first-out method.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

continually analyzes its slow-moving, excess and obsolete inventories.

The Company continually analyzes its slow-moving, excess and obsolete inventories.

Based on historical and projected sales volumes and anticipated selling prices, the Company establishes reserves.

1 unchanged sentence

Products that are determined to be obsolete are written down to net realizable value.

As of December 31, 2021 and 2020, the Company had recorded an inventory obsolescence of approximately $ 0.4 million and $ 0.1 million, respectively.

As of December 31, 2022 and 2021, the Company had recorded an inventory obsolescence of approximately $ 0.4 million.

Short-term investments

9 unchanged sentences

When ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity).

The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

The purpose of this classification is to convey that such a

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

Investment in equity securities- fair value

3 unchanged sentences

Any unrealized appreciation or depreciation on investment securities is reported in the Condensed Consolidated Statement of Operations within Unrealized Loss on Equity Securities.

The Unrealized loss on equity securities was $ 57.1 million, and zero , for the years ended December 31, 2021 and 2020, respectively.

The unrealized loss on equity securities was $ 7.9 million, and $ 57.1 million, for the years ended December 31, 2022 and 2021, respectively.

Property and Equipment, net

8 unchanged sentences

The Company assesses the carrying value of its intangible assets for impairment each year.

Based on its assessments, the Company did not incur any impairment charges for the years ended December 31, 2021 and 2020.

Based on its assessments, the Company has recorded impairment of $ 4.6 million and zero during the years ended December 31, 2022 and 2021, respectively.

Acquired In-Process Research and Development (“IPR&D”)

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

In accordance with authoritative guidance, the Company recognizes IPR&D at fair value as of the acquisition date, and subsequently accounts for it as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts.

3 unchanged sentences

The Company's IPR&D is comprised of AirPatrol, LightMiner, Locality, Jibestream, GTX, SYSTAT, Ten Degrees, Nanotron, Game Your Game, Visualix, CXApp and IntraNav, which was valued on the date of the acquisition.

It will take additional financial resources to continue development of these technologies.

As of the years ended December 31, 2022 and 2021 there was no IPR&D capitalized on the consolidated balance sheets.

The Company continues to seek additional resources, through both capital raising efforts and meeting with industry experts, for further development of these technologies.

2 unchanged sentences

Management remains focused on growing revenue from these products and continues to pursue efforts to recognize the value of the technologies.

If the Company chooses to abandon these efforts, or if the Company determines that such funding is not available, the related IPR&D will be subject to significant impairment.

If the Company chooses to abandon these efforts, or if the Company determines that such funding is not available, the related technologies could be subject to significant impairment.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit.

9 unchanged sentences

The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.

The Company performed the annual impairment test as of December 31, 2021 and has recorded impairment of goodwill of $ 14.8 million and zero during the years ended December 31, 2021 and 2020, respectively.

The Company has recorded impairment of goodwill of $ 7.6 million and $ 14.8 million during the years ended December 31, 2022 and 2021, respectively.

Other Long Term Investments

3 unchanged sentences

The Company generally recognizes its share of the equity method investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely from the Company’s reporting period.

The Company evaluates an equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.

Software Development Costs

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company develops and utilizes internal software for the processing of data provided by its customers.

2 unchanged sentences

These software development costs are amortized over the estimated useful life which management has determined ranges from 1 to 5 years.

Leases and Right-of-Use Assets

The Company determines if an arrangement is a lease at its inception.

Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

The Company generally uses their incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known.

Right-of-use assets related to the Company's operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives.

The Company's lease terms that are used in determining their operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that the Company will exercise such options.

The Company amortizes their right-of-use assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses.

The Company does not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year .

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Research and Development

16 unchanged sentences

Non-Controlling Interest

The Company has an 82.5 % equity interest in Inpixon India and a 55.4 % equity interest in Game Your Game as of December 31, 2021.

The portion of the Company’s equity attributable to this third party non-controlling interest was approximately $ 1.7 million and $ 41 thousand as of December 31, 2021 and 2020, respectively.

The Company has an 82.5 % equity interest in Inpixon India, a 99.97 % equity interest in Inpixon Philippines and a 55.4 % equity interest in Game Your Game as of December 31, 2022.

The portion of the Company’s equity attributable to this third party non-controlling interest was approximately $( 0.1 ) million and $ 1.7 million as of December 31, 2022 and 2021, respectively.

The Company disposed of its equity interest in Inpixon Philippines in connection with the Closing of the Transactions disclosed under Note 32 herein, which include the Enterprise Apps Spin-off and the Merger.

Foreign Currency Translation

Assets and liabilities related to the Company’s foreign operations are calculated using the Indian Rupee, Canadian Dollar, British Pound and Euro, and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period.

Assets and liabilities related to the Company’s foreign operations are calculated using the Indian Rupee, Canadian Dollar, British Pound, Philippine Peso and Euro, and are translated at end-of-period exchange rates, while the related revenues and expenses are translated at average exchange rates prevailing during the period.

Translation adjustments are recorded as a separate component of consolidated stockholders’ equity, totaling a gain/(loss) of approximately $ 1.0 million and $( 0.6 ) million for the years ended December 31, 2022 and 2021, respectively.

Gains or losses resulting from transactions denominated in foreign currencies are included in other income (expense) in the consolidated statements of operations.

Gains or losses resulting from transactions denominated in foreign currencies are included in general and administrative expenses in the consolidated statements of operations.

The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S.

1 unchanged sentence

Comprehensive Income (Loss)

The Company reports comprehensive income (loss) and its components in its consolidated financial statements.

Comprehensive loss consists of net loss, foreign currency translation adjustments and unrealized gains and losses from marketable securities, affecting stockholders’ (deficit) equity that, under GAAP, are excluded from net loss.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

The Company reports comprehensive income (loss) and its components in its consolidated financial statements.

Revenue Recognition

30 unchanged sentences

Anticipated losses are recognized as soon as they become known.

For the years ended

For the years ended December 31, 2022 and 2021, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

License Revenue Recognition

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

December 31, 2021 and 2020, the Company did not incur any such losses.

These amounts are based on known and estimated factors.

License Revenue Recognition

The Company enters into contracts with its customers whereby it grants a non-exclusive on-premise license for the use of its proprietary software.

22 unchanged sentences

The Company recognizes eligible sales commissions as an asset as the commissions are an incremental cost of obtaining a contract with the customer and the Company expects to recover these costs.

The capitalized costs are amortized over the expected contract term including any expected renewals.

The capitalized costs are amortized over the expected contract term.

Cost to Fulfill a Contract

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company incurs costs to fulfill their obligations under a contract once it has obtained, but before transferring goods or services to the customer.

1 unchanged sentence

The capitalized costs are amortized over the expected remaining contract term.

Multiple Performance Obligations

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

The Company enters into contracts with customers for its technology that include multiple performance obligations.

Each distinct performance obligation was determined by whether the customer could benefit from the good or service on its own or together with readily available resources.

The Company allocates revenue to each performance obligation based on its relative standalone selling price.

The Company's process for determining standalone selling price considers multiple factors including the Company's internal pricing model and market trends that may vary depending upon the facts and circumstances related to each performance obligation.

Sales and Use Taxes

The Company presents transactional taxes such as sales and use tax collected from customers and remitted to government authorities on a net basis.

Shipping and Handling Costs

5 unchanged sentences

Stock-Based Compensation

The Company accounts for options granted to employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant.

The Company accounts for options granted to employees, consultants and other non-employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant.

The fair value of that award is then ratably recognized as an expense over the period during which the recipient is required to provide services in exchange for that award.

Options and warrants granted to consultants and other non-employees are recorded at fair value as of the grant date and subsequently adjusted to fair value at the end of each reporting period until such options and warrants vest, and the fair value of such instruments, as adjusted, is expensed over the related vesting period.

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

The fair value of the award is measured on the grant date and recognized over the period services are required to be provided in exchange for the award, usually the vesting period.

Forfeitures of unvested stock options are recorded when they occur.

The Company incurred stock-based compensation charges of approximately $ 3.7 million and $ 10.9 million for each of the years ended December 31, 2022 and 2021, respectively, which are included in general and administrative expenses.

Stock-based compensation charges are related to employee compensation and related benefits.

Net Income (Loss) Per Share

1 unchanged sentence

Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

For the Years Ended December 31,

Net loss attributable to stockholders of Inpixon $ ( 69,155 ) $ ( 29,229 )

Accretion of Series 7 preferred stock ( 8,161 ) —

Net loss attributable to common stockholders $ ( 77,316 ) $ ( 29,229 )

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 107,981,441 28,800,493

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.72 ) $ ( 1.01 )

The following table summarizes the number of common shares and common share equivalents excluded from the calculation of diluted net loss per common share for the years ended December 31, 2022 and 2021:

5 unchanged sentences

Totals 6,563,626 2,210,272

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Preferred Stock

9 unchanged sentences

The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

2 unchanged sentences

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the years ended December 31, 2022 and 2021.

Fair value measurements are applied, when applicable, to determine the fair value of our long-lived assets and goodwill.

We recorded non-cash impairment charges as discussed further in Note 13.

The fair value measurement of these assets is categorized as a Level 3 measurement as the valuation techniques require the use of significant unobservable inputs.

Fair Value of Financial Instruments

9 unchanged sentences

An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value.

Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis.

Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

long-lived asset shall be its new cost basis.

For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset.

9 unchanged sentences

The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

Based on its assessments, the Company did not record any impairment charges for the years ended December 31, 2021 and 2020.

Based on its assessments, the Company has recorded impairment of goodwill and intangibles of $ 12.2 million and $ 14.8 million during the years ended December 31, 2022 and 2021, respectively.

Recently Issued and Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, "Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes.

ASU 209-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 became effective for the Company beginning January 1, 2021.

The new guidance was effective upon issuance of this final

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

accounting standards update.

The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.

In October 2020, the FASB issued ASU 2020-10, "Codification Improvements" (ASU 2020-10"), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC's regulations.

The effective date of the standard is for interim and annual reporting periods beginning after December 15, 2020 for public entities.

The Company adopted ASU 2020-10 as of the reporting period beginning January 1, 2021.

The new guidance was effective upon issuance of this final accounting standards update.

The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.'

Recently Issued Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)" ("ASU 2020-06"), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

ASU 2020-06 removes from U.S.

GAAP the separation models for (1) convertible debt with a cash conversion feature ("CCF") and (2) convertible instruments with a beneficial conversion feature ("BCF").

As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt.

Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium.

ASU 2020-06 is effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The Company will adopt the provisions of ASU 2020-06 effective January 1, 2022 and is currently assessing potential impacts.

In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)” (“ASU 2020-06”) .

ASU 2020-06 reduces the number of models used to account for convertible instruments, amends diluted EPS calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity.

The amendments add certain disclosure requirements to increase transparency and decision-usefulness about a convertible instrument's terms and features.

Under the amendment, the Company must use the if-converted method for including convertible instruments in diluted EPS as opposed to the treasury stock method.

ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2023 for smaller reporting companies as defined by the SEC.

Early adoption is allowed under the standard with either a modified retrospective or full retrospective method.

The Company early adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method.

As a result of management’s evaluation, the adoption of ASU 2020-06 did not have a material impact on the consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, "Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options'" ("ASU 2021-04"), which introduces a new way for companies to account for warrants either as stock compensation or derivatives.

2 unchanged sentences

The effective date of the standard is for interim and annual reporting periods beginning after December 15, 2021 for all entities, and early adoption is permitted.

The Company is currently evaluating the impact of the new guidance and does not expect the adoption of this guidance will have a material impact on its condensed consolidated financial statements and disclosures.

The Company adopted ASU 2021-04 on January 1, 2022.

As a result of management’s evaluation, the adoption of ASU 2021-04 did not have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU 2021-08"), which addresses diversity in practice related to the accounting for revenue contracts with customers acquired in a business combination.

Under the new guidance, the acquirer is required to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

The effective date of the standard is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The effects of this change on the Company's financial statements have not yet been determined.

The effective date of the standard is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Company adopted ASU 2021-08 on January 1, 2022.

As a result of management’s evaluation, the adoption of ASU 2021-08 did not have a material impact on the consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832)" ("ASU 2021-10"), which provides guidance on disclosing government assistance.

1 unchanged sentence

The effective date of the standard is for annual periods beginning after December 15, 2021.

Reverse Stock Split

On January 7, 2020, the Company effected a 1-for-45 reverse stock split of its outstanding common stock.

The consolidated financial statements and accompanying notes give effect to the reverse stock split as if it occurred at the beginning of the first period presented.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

adopted ASU 2021-10 on January 1, 2022.

As a result of management’s evaluation, the adoption of ASU 2021-10 did not have a material impact on the consolidated financial statements.

Note 3 - Disaggregation of Revenue

27 unchanged sentences

Total Revenue $ 19,418 $ 15,995

(1) Hardware and Software's performance obligation is satisfied at a point in time where when they are shipped to the customer.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(1) Hardware and Software's performance obligation is satisfied at a point in time where when they are shipped to the customer.

(2) Professional services are also contracted on the fixed fee and time and materials basis.

2 unchanged sentences

(3) Software As A Service Revenue's performance obligation is satisfied evenly over the service period using a time-based measure because the Company is providing continuous access to its service and service is recognized overtime.

Note 4 - Systat Licensing Agreement

On June 19, 2020, the Company entered into an exclusive license with Cranes Software International Ltd.

and Systat Software, Inc.

(together the “Systat Parties”) to use, market, distribute, and develop the SYSTAT and SigmaPlot software suite of products (the “License Grant”) pursuant to the terms and conditions of that certain Exclusive Software License and Distribution Agreement, deemed effective as of June 1, 2020 (the “Effective Date”), and amended on June 30, 2020 (as amended, the “License Agreement”).

The Company pursued this transaction in order to diversify its product offerings by increasing its software solution offerings, in addition to expanding its cross-selling opportunities across a global customer base in an effort to maintain continued revenue growth and mitigate or offset the risks and uncertainties anticipated with its existing hardware products as a result of the Covid-19 pandemic.

In accordance with ASC 805, the transaction was deemed to be the acquisition of a business and accounted for as a business combination with an acquisition date of June 30, 2020 (the “Closing Date”).

In accordance with the terms of the License Agreement, on the Closing Date, we partitioned a portion of that certain promissory note (the “Sysorex Note”) issued to us by Sysorex, Inc.

(“Sysorex”), into a new note in an amount equal to $ 3.0 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat Software, Inc.

in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement.

An additional $ 3.3 million of the principal balance underlying the Sysorex Note was partitioned and assigned to Systat Software, Inc.

as consideration payable for the rights granted under the license as follows:

(i) $ 1.3 million on the three month anniversary of the Closing Date;

(ii) $ 1.0 million on the six month anniversary of the Closing Date;

and (iii) $ 1.0 million on March 19, 2021.

In addition, the cash consideration of $ 2.2 million was delivered on July 8, 2020.

In connection with the License Grant, the Systat Parties provided Inpixon with equipment to use at no additional cost for a minimum period of six months following the Closing Date.

The Company is also entitled to any customer maintenance revenue, new license fees, or license renewal fees, received by any of the Systat Parties after June 1, 2020 in connection with the Systat Customer Contracts and/or Systat Distribution Agreements (as such terms are defined in the License Agreement) assigned to and assumed by us in connection with the License Agreement.

The net amount owed to the Company for this period is included in the Other Receivable line item listed in the assets acquired below.

The License Grant will remain in effect for a period of 15 years years following the Closing Date, unless terminated sooner upon mutual written consent of Systat Software, Inc.

and us or upon termination by either for the other party’s specified breach.

In connection with the License Grant, the Company expanded its operations into the United Kingdom and Germany.

As a result of such expansion, the Company formed Inpixon Limited, a new wholly owned subsidiary in the United Kingdom, and established Inpixon GmbH, a wholly owned subsidiary incorporated under the laws of Germany.

The total recorded purchase price for the transaction was $ 2.2 million, which consisted of the $ 2.2 million cash consideration as a full valuation allowance was retained against the Sysorex Note.

The purchase price is allocated as follows (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Fair Value Allocation

Assets Acquired:

Other receivable $ 44

Developed technology 1,190

Customer relationships 430

Tradename & Trademarks 279

Non-compete agreements 495

Liabilities Assumed:

Deferred Revenue $ 733

Total Purchase Price $ 2,200

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The deferred revenue included in the consolidated financial statements is the expected liability to service the projects.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is deductible for tax purposes.

The financial data of the License Grant is included in the Company’s financial statements as of deemed acquisition date of June 30, 2020.

On February 22, 2021, the Company entered into a Second Amendment to the License Agreement to allow for the exercise of the purchase option in whole or in part anytime during the Purchase Option Period and to provide for cash consideration in lieu of an assignment of the Note at its option.

In addition, the Company exercised its option to purchase a portion of the underlying assets, including certain software, trademarks, solutions, domain names and websites from Systat in exchange for consideration in an amount equal to $ 0.9 million.

The Second Amendment was accounted for as a business combination in accordance with ASC 805 Business Combinations.

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

Intangible assets:

Trademarks $ 296

Webstores & Websites 404

Total net assets acquired $ 900

Proforma information has not been presented as it has been deemed immaterial.

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is deductible for tax purposes.

Note 5 - Ten Degrees Acquisition

On August 19, 2020, in accordance with the terms and conditions of that certain Asset Purchase Agreement ("APA"), by and among the Company, Ten Degrees Inc.

(“TDI”), Ten Degrees International Limited (“TDIL”), mCube International Limited

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(“MCI”), and the holder of a majority of the outstanding capital of TDIL and mCube, Inc., and the sole shareholder of 100 % of the outstanding capital stock of MCI (“mCube,” together with TDI, TDIL, and MCI collectively, the “Transferors”), the Company acquired a suite of on-device “blue-dot” indoor location and motion technologies, including patents, trademarks, software and related intellectual property from the Transferors (collectively, the “TDI Assets”).

The acquisition of the blue-dot technology further strengthened and enhanced the Company’s indoor intelligence capabilities allowing it to offer on-device wayfinding capabilities through integration with its mapping technology.

In accordance with ASC 805, the transaction was deemed to be the acquisition of a group of assets, and not to be accounted for as a business combination, with an asset acquisition date of August 19, 2020.

The TDI Assets were acquired for consideration consisting of (i) $ 1.5 million in cash and (ii) 480,000 shares of the Company's common stock.

In accordance with the terms of the APA, commencing as of the date of the APA, the Transferors, and their affiliates, have agreed to not compete with our business associated with the TDI Assets for a period of five years from the closing date.

In addition, each party agreed to not solicit any employees from the other party for a period of one year from the closing date, subject to certain exceptions.

The total recorded purchase price for the transaction was $ 2.1 million, which consisted of the cash paid of $ 1.5 million and $ 0.6 million representing the value of the stock issued upon closing.

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

Assets Acquired:

Developed technology $ 1,701

Non-compete agreements 399

Total Purchase Price $ 2,100

The value of the intangibles were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The developed technology and non-compete agreements acquired are included in the consolidated balance of intangible assets as of December 31, 2021.

There was no goodwill acquired or recognized as a result of the acquisition of Ten Degrees.

Note 6 – Nanotron Acquisition

On October 6, 2020, the Company, through its wholly-owned subsidiary, Inpixon GmbH, a limited liability company incorporated under the laws of Germany, completed the acquisition of all the outstanding capital stock of Nanotron, a limited liability company incorporated under the laws of Germany, pursuant to the terms and conditions of that certain Share Sale and Purchase Agreement, dated as of October 5, 2020, among the Company, Nanotron and Sensera Limited (the "Seller", and the owner of all outstanding shares of Nanotron), a stock corporation incorporated under the laws of Australia and the sole shareholder of Nanotron.

As a result of the acquisition, the Company now owns 100 % of Nanotron.

Nanotron’s business consists of developing and manufacturing location-aware IoT systems and solutions.

The Company pursued the transaction in order to further strengthen and expand its indoor intelligence platform and capabilities to include real time location services and asset tracking capabilities broadening its industry cover to include the industrial sector, expand its customer, partner and user base and deepen its geographic presence in regions outside of North America.

The total paid to Nanotron was an aggregate purchase price of $ 8.7 million in cash (less the Holdback Funds (as defined below) and certain other closing adjustments) for the outstanding shares of Nanotron.

The price was subject to certain post-Closing adjustments based on actual working capital as of the closing as described in the Purchase Agreement.

Inpixon retained $ 0.8 million (the “Holdback Funds”) from the purchase price to secure Nanotron’s obligations under the purchase agreement, with any unused portion of the Holdback Funds to be released to the Seller on the date that is 18 months after the Closing Date.

As discussed above, the certain adjustments to the Purchase Price are adjustments for severance payments and calculations of Net Working Capital versus the Working Capital Target (calculation defined as “Net Working Capital Adjustment”).

The adjustment for severance payments includes a $ 0.2 million reduction in purchase price for severance payments due after the closing date offset by a return credit of $ 0.1 million for severance payments owed by Sensera Limited.

As for Net Working Capital Adjustment, Net Working Capital was determined to be less than the Working Capital Target by an amount of $ 0.03

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

million, resulting in a reduction in the purchase price of $ 0.03 million.

Inpixon Germany paid the purchase price from funds received in connection with a capital contribution from Inpixon, and a portion of the purchase price was used by the Seller to satisfy outstanding loans payable by Sensera Limited to obtain the release of certain existing security interests on Nanotron’s assets.

On February 24, 2021, the Company entered into an amendment to the Purchase Agreement pursuant to which we agreed to the early release of the Holdback Funds, in exchange for a reduction in the total amount payable to the Seller by $ 0.2 million.

In addition, the amount payable was further reduced by $ 0.1 million in connection with a post closing working capital adjustment and the satisfaction of a claim related to a customer dispute.

A balance of $ 0.5 million was paid to the Seller in full satisfaction of the Holdback Funds payable by the Purchaser to the Seller pursuant to the Purchase Agreement.

The purchase price is allocated as follows (in thousands):

Fair Value Allocation

Assets acquired:

Cash and cash equivalents $ 301

Trade and other receivables 576

Inventory 827

Prepaid expenses and other current assets 103

Operating lease right-of-use asset 557

Property, plant, and equipment 433

Proprietary Technology 1,213

Customer Relationships 1,055

Non-compete Agreements 610

In-Process R&D 505

IP Agreement 178

Goodwill 3,501

Total assets acquired $ 9,910

Liabilities assumed:

Accounts payable 526

Lease liabilities 557

Restructuring Costs 214

Accrued Liabilities 361

Total liabilities assumed 1,658

Estimated fair value of net assets acquired:

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The goodwill represents the excess fair value after the allocation to the intangibles.

The calculated goodwill is not tax deductible for local tax purposes, but will be amortizable in the computation of the shareholder’s U.S.

tax liability.

Note 4 - Game Your Game Acquisition

On April 9, 2021, the Company acquired Game Your Game, and its wholly owned subsidiary Active Mind to further the Company's strategy to reach the end customer with apps in the growing sports analytics space.

In exchange for a purchase price

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

of $ 3.1 million the Company acquired 522,000 shares of the Company's common stock from Game Your Game, which represent 55.4 % of the outstanding shares of Common Stock of Game Your Game.

In exchange for a purchase price of $ 3.1 million the Company acquired 522,000 shares of the Company's common stock from Game Your Game, which represent 55.4 % of the outstanding shares of Common Stock of Game Your Game.

The goodwill of $ 0.5 million arising from the acquisition consists of an acquired workforce, as well as synergies and economies of scale expected from combined operations of Inpixon and Game Your Game.

3 unchanged sentences

The acquisition is being accounted for as a business combination in accordance with ASC 805 Business Combinations.

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has determined the fair values of the assets acquired and liabilities assumed in the acquisition.

In connection with the acquisition, the Company recorded a non-controlling interest for the 44.6 % ownership from unrelated third parties.

3 unchanged sentences

The following table summarizes the purchase price allocations relating to the Acquisition (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Fair Value Allocation

17 unchanged sentences

Estimated fair value of net assets acquired attributable to the Company $ 3,070

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

12 unchanged sentences

Additionally, the Company purchased certain patent applications related to the underlying technology from FEVM.

The Company acquired Visualix to rapidly advance our 3D mapping and to add

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

augmented reality and computer vision capabilities to our product and our product/engineering teams.

This innovation is important to our product roadmap and will allow us to stay ahead of the competition.

In consideration of the transactions (the “Consideration”) contemplated by the Asset Purchase Agreement, the Company:

14 unchanged sentences

(“CXApp”) which enables corporate enterprise organizations to provide a custom-branded, location-aware employee app focused on enhancing the workplace experience and hosting virtual and hybrid events.

An important aspect of the Company’s strategy towards delivering a comprehensive indoor intelligence

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

offering required direct engagement with the end-user through an app.

An important aspect of the Company’s strategy towards delivering a comprehensive indoor intelligence offering required direct engagement with the end-user through an app.

With the CXApp acquisition, the Company was able to establish that direct engagement, eliminating the need for a third part app developer partner.

11 unchanged sentences

The Company retained cash for these future payments and recorded these future payments in Acquisition Liability on the closing date of the Acquisition.

During the measurement period the holdback funds was adjusted by $ 0.2 million to account for work capital adjustments.

During the measurement period the holdback funds was adjusted by

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

$ 0.2 million to account for work capital adjustments.

The following represents the amounts that were recorded to Acquisition Liability (in thousands):

10 unchanged sentences

Less adjustment to holdback funds due to measurement period adjustment ( 209 )

Less payments made during the three months ended June 30, 2021 ( 136 )

Less payments made during the three months ended September 30, 2021 ( 104 )

Less payments made during the three months ended December 31, 2021 $ ( 220 )

Less payments made during the year ended December 31, 2021 ( 460 )

Less payments made during the year ended December 31, 2022 ( 5,135 )

Total acquisition liability $ 197

In connection with the Acquisition, the Company is to pay an additional amount up to $ 12.5 million to certain select sellers of CXApp shares (payable in shares of the Company’s common stock based on a per share price of $ 1.13 , subject to stockholder approval) in contingent earnout payments subject to CXApp meeting certain revenue targets on the one year anniversary of the Acquisition date.

In connection with the Acquisition, the Company was required to pay an additional amount up to $ 12.5 million to certain select sellers of CXApp shares (payable in shares of the Company’s common stock based on a per share price of $ 1.13 , subject to stockholder approval) in contingent earnout payments subject to CXApp meeting certain revenue targets on the one year anniversary of the Acquisition date.

(the "Earnout Payment").

The Earnout Payment is subject to and conditioned upon each individual select seller's continued active employment or service with the Company at the time of the earnout payment date.

The Earnout Payment is treated as post-combination compensation expense.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Earnout Payment was subject to and conditioned upon each individual select seller's continued active employment or service with the Company at the time of the earnout payment date.

The Earnout Payment was treated as post-combination compensation expense.

On December 30, 2021, the Company entered into an Amendment to Stock Purchase Agreement (the "Amendment"), with the sellers' representative, pursuant to which the parties to the Purchase Agreement agreed to (i) amend the amount of the earnout target from $ 8.3 million to $ 4.2 million;

(ii) amend the duration of the earnout period from the period of the closing date through twelve month anniversary to the cclosing date to the period from the closing date through December 31, 2021;

(ii) amend the duration of the earnout period from the period of the closing date through twelve month anniversary to the closing date to the period from the closing date through December 31, 2021;

and (iii) eliminate the sellers' representative's right to accelerate the Earnout Payment upon a sale or change of control of the Company.

The Company evaluated the Amendment noting the Amendment accelerated expense related to the Earnout Payment.

The Company recorded $ 6.5 million of this expense for the year ended December 31, 2021 which is included in the General and Administrative costs of the consolidated statements of operations.

The Acquisition is being accounted for as a business combination in accordance with ASC 805 Business Combinations.

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Acquisition to the assets acquired and the liabilities

assumed as of the purchase date.

The following table summarizes the preliminary purchase price allocations relating to the Acquisition (in thousands):

The Company has determined fair values of the assets acquired and liabilities assumed in the Acquisition.

The Company has made an allocation of the purchase price of the Acquisition to the assets acquired and the liabilities assumed as of the purchase date.

The following table summarizes the purchase price allocations relating to the Acquisition (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Fair Value Allocation

5 unchanged sentences

Tradename 2,170

Proprietary technology 8,350

Developed technology 8,350

Customer relationships 5,020

11 unchanged sentences

The value of the intangibles and goodwill were calculated by a third party valuation firm based on projections and financial data provided by management of the Company.

The assets were valued using a combination of multi-period excess earnings methodologies, a relief from royalty approach, a discounted cash flow approach and present value of cash flows approach.

The goodwill represents the excess fair value after the allocation to the intangibles.

2 unchanged sentences

The below table details the acquisition-related costs for the Acquisition (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Accounting fees $ 115

1 unchanged sentence

Total acquisition costs $ 504

On March 3, 2022, we entered into a Second Amendment to that certain Stock Purchase Agreement, dated as of April 30, 2021 (the "CXApp Stock Purchase Agreement"), by and among the Company, Design Reactor, Inc.

(the "CXApp") and the holders of the outstanding capital stock of CXApp (the "Sellers") with the Sellers' Representative (as defined in the CXApp Stock Purchase Agreement), pursuant to which the parties agreed that withholding taxes payable by certain of the Sellers, as applicable, in connection with the issuance of the Earnout Shares (as defined in the CXApp Purchase Agreement) would be offset up to the aggregate amount payable to such Seller by the Company from the Holdback Amount (as defined in the CXApp Purchase Agreement) and the Holdback Amount would be reduced by an equal amount.

On March 3, 2022, the Company issued 144,986 shares of common stock to the Sellers in connection with the satisfaction of the Earnout Payment (as defined in the CXApp Purchase Agreement).

The fair market value of the Earnout Shares issued of $ 3.7 million was lower than the fair market value of the Earnout Shares as of December 31, 2021 of $ 6.5 million, and therefore the Company recorded a benefit of

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

$ 2.8 million for the year ended December 31, 2022, which is included in the General and Administrative costs of the condensed consolidated statements of operations.

Note 7 - IntraNav Acquisition

4 unchanged sentences

The Acquisition is being accounted for as a business combination in accordance with ASC 805.

The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Acquisition.

These values are subject to change as we perform additional reviews of our assumptions utilized.

The Company has made a provisional allocation of the purchase price of the Acquisition to the assets acquired and the liabilities assumed as of the purchase date.

The following table summarizes the provisional purchase price allocations relating to the Acquisition:

The Company has determined the fair values of the assets acquired and liabilities assumed in the Acquisition.

The Company has made the allocation of the purchase price of the Acquisition to the assets acquired and the liabilities assumed as of the purchase date.

The following table summarizes the purchase price allocations relating to the Acquisition:

Cash Considerations (EUR) € 1,000,000

33 unchanged sentences

Note 8 - Proforma Financial Information

Nanotron Proforma and CXApp Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company, Nanotron and CXApp for the years ended December 31, 2021 and 2020, as if the acquisitions had occurred as of the beginning of the first period presented instead of on October 5, 2020 for Nanotron and on April 30, 2021 for CXApp.

The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

CXApp Proforma Financial Information

The following unaudited proforma financial information presents the consolidated results of operations of the Company and CXApp for the year ended December 31, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 30, 2021.

The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during the period.

The proforma financial information for Game Your Game, Visualix and IntraNav have not been presented as it is deemed immaterial.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

The proforma financial information for Systat, Ten Degrees, Game Your Game, Visualix and IntraNav have not been presented as it is deemed immaterial.

The proforma financial information for the Company, Nanotron and CXApp is as follows (in thousands):

The proforma financial information for the Company and CXApp is as follows (in thousands):

For the Years Ended December 31,

10 unchanged sentences

Finished goods 1,964 1,274

Subtotal 2,414 1,381

Inventory obsolescence reserve ( 438 ) ( 138 )

Total Inventory $ 1,976 $ 1,243

Inventory $ 2,442 $ 1,976

INPIXON AND SUBSIDIARIES

11 unchanged sentences

Total Property and Equipment, Net $ 1,266 $ 1,442

Depreciation and amortization expense were approximately $ 0.4 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively.

Depreciation and amortization expense were approximately $ 0.4 million and $ 0.4 million for both the years ended December 31, 2022 and 2021, respectively.

Note 11 - Investment in Equity Securities

6 unchanged sentences

Total investments in equity securities - fair value $ 65,301 $ 330

For the year ended December 31, 2021, the Company recognized a net unrealized loss of $ 57.1 million on the statement of operations.

There were no realized gains and losses on equity securities for the year ended December 31, 2021.

We entered into a note purchase agreement with Sysorex, as amended from time to time, pursuant to which we agreed to loan Sysorex up to an aggregate principal amount of $ 10.0 million on a revolving credit basis (the "Sysorex Note").

On March 1, 2020, we agreed to extend the maturity date of the note from December 31, 2020 to December 31, 2022.

On April 14, 2021, we entered into a Securities Settlement Agreement (the “SSA”) and a Rights Letter Agreement (the “RLA”), with Sysorex, whereby it agreed to satisfy in full its outstanding debt, in the aggregate amount of approximately $ 9.1 million as of March 31, 2021, owed to the Company, including but, not limited to, amounts outstanding under the Sysorex Note (the “Debt Settlement”).

To effect the Debt Settlement, Sysorex agreed to issue to us 12,972,189 shares of its common stock and rights to acquire 3,000,000 shares of its common stock pursuant to the terms of the RLA.

The Debt Settlement was entered into in connection with Sysorex’s closing of a reverse triangular merger with TTM Digital Assets & Technologies, Inc.

As of December 31, 2022 and 2021 the fair value of the Sysorex shares and rights to acquire shares were $ 0.01 million and $ 1.8 million, respectively.

On April 27, 2022, the Company purchased a 10 % convertible note in aggregate principal amount of $ 6,050,000 for a purchase price of $ 5,500,000 from FOXO Technologies Operating Company, formerly FOXO Technologies Inc.

(“FOXO Legacy”), pursuant to the terms of a securities purchase agreement between FOXO Legacy and the Company (the “April 2022 Purchase Agreement”).

Interest on the convertible note accrues at 12 % per annum.

The term of the convertible note is twelve months , however FOXO Legacy has the ability to extend the maturity date for an additional 3 months.

The convertible note is subject to certain conversion features which include qualified financing, and/or qualified transaction, as defined in the April 2022 Purchase Agreement.

The Company can voluntarily convert the note after 270 days.

The note is required to convert upon FOXO Legacy completing a qualified offering.

On September 15, 2022, FOXO Legacy consummated a business combination with Delwinds Insurance Acquisition Corp., now known as FOXO Technologies Inc.

("FOXO"), which qualified as a qualified offering as defined in the April 2022 Purchase Agreement.

This qualified offering triggered a mandatory conversion of the convertible note to FOXO Legacy common stock which was then automatically converted into 891,124 shares of FOXO Class A common stock, par value $ 0.0001 (“FOXO

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

common stock”) upon closing of the business combination.

The Company recognized an unrealized gain on conversion of $ 0.8 million to be recognized in the statement of operations for the year ended December 31, 2022.

FOXO common stock is traded in active markets, as the security is trading under “FOXO” on the NYSE American.

FOXO common stock is accounted for as available-for-sale equity securities based on “Level 1” inputs, which consist of quoted prices in active markets, with unrealized holding gains and losses included in earnings.

The fair value was determined by the closing trading price of the security as of December 31, 2022.

The Company recognized an unrealized loss on FOXO common stock of $ 6.1 million to be recognized in the statement of operations for the year ended December 31, 2022.

As of December 31, 2022 and 2021 the fair value of the FOXO shares was $ 0.32 million and $ — , respectively.

For the year ended December 31, 2022 and 2021, the Company recognized a net unrealized loss on investments in equity securities of $ 7.9 million and $ 57.1 million on the statement of operations.

Note 12 - Software Development Costs, net

4 unchanged sentences

Software development costs, net $ 1,752 $ 1,792

The Company tests its long lived assets for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit.

There was no impairment recorded for the years ended December 31, 2022 and 2021.

The weighted average remaining amortization period for the Company’s software development costs is 2.4 years.

1 unchanged sentence

Future amortization expense on the computer software is anticipated to be as follows (in thousands):

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

For the Years Ending December 31, Amount

1 unchanged sentence

Total $ 1,752

Note 16 - Goodwill and Intangible Assets

The Company has recorded goodwill and other indefinite-lived assets in connection with its acquisition of Systat, GTX Nanotron, Locality, Jibestream, CXApp, Game Your Game, and IntraNav.

Goodwill, which represents the excess of acquisition cost over the fair value of the net tangible and intangible assets of the acquired company, is not amortized.

Indefinite-lived intangible assets are stated at fair value as of the date acquired in a business combination.

The Company’s goodwill balance and other assets with indefinite lives were evaluated for potential impairment on a reporting unit level during the years ended December 31, 2021 and 2020, as certain indications on a qualitative and quantitative basis were identified that an impairment exists as of the reporting date as of December 31, 2021.

During the year ended December 31, 2021, the Company recognized approximately $ 14.8 million of goodwill impairment on GTX, Nanontron, Locality, Jibestream, CXApp, Game Your Game and IntraNav.

During the year ended December 31, 2020, the Company did no t recognize any goodwill impairment.

The Company utilized qualitative factors in determining if the carrying amounts of the Company’s reporting units exceeded the fair value of the Company, and noted that no such factors indicated impairment on any of its goodwill.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 13 - Goodwill and Intangible Assets

The Company reviews goodwill for impairment on a reporting unit basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

The Company’s significant assumptions in these analyses include, but are not limited to, project revenue, the weighted average cost of capital, the terminal growth rate, derived multiples from comparable market transactions and other market data.

The Company's goodwill balance and other assets with indefinite lives were evaluated for potential goodwill impairment on a reporting unit basis during the period ended June 30, 2022, as certain indications on a qualitative and a quantitative basis were identified that an impairment exists as of the reporting date primarily from a sustained decrease in their stock price.

The Company utilized a mix of both the income and market approaches in determining the fair value of the reporting units.

The Company noted that 50 % weight was attributed to the income approach and 50 % was attributed to the market approach.

During the year ended December 31, 2022, the Company recognized approximately $ 7.6 million of goodwill impairment on Systat, GTX, Nanotron, Jibestream, CXApp, Game Your Game, and IntraNav.

During the year ended December 31, 2022, the Company's cumulative impairment charges are approximately $ 31.0 million with approximately $ 29.1 million related to the Indoor Intelligence reporting unit, approximately $ 1.2 million related to the Shoom reporting unit and approximately $ 0.7 million related to the SAVES reporting unit.

As of December 31, 2021, the Company's cumulative goodwill impairment charges were approximately $ 23.4 million with approximately $ 22.2 million related to the Indoor Intelligence reporting unit and approximately $ 1.2 million related to the Shoom reporting unit.

The following table summarizes the changes in the carrying amount of Goodwill for the year ended December 31, 2022 (in thousands):

3 unchanged sentences

Goodwill additions through acquisitions 200 — — — — 17,432 286 482 18,400

Goodwill impairment — ( 1 ) ( 2,263 ) ( 689 ) ( 967 ) ( 10,239 ) ( 307 ) ( 323 ) ( 14,789 )

Valuation measurement period adjustments ( 25 ) — ( 255 ) — — ( 2,127 ) 173 — ( 2,234 )

Exchange rate fluctuation at December 31, 2021 — — ( 294 ) 17 ( 16 ) — — — ( 293 )

Balance as of January 1, 2022 $ 695 $ 1 $ 1,119 $ — $ 480 $ 5,066 $ 152 $ 159 $ 7,672

Goodwill additions through acquisitions 200 — — — — 17,432 286 482 18,400

Goodwill impairment ( 695 ) ( 1 ) ( 1,035 ) — ( 474 ) ( 5,066 ) ( 152 ) ( 147 ) ( 7,570 )

Valuation Measurement Period Adjustments ( 25 ) — ( 255 ) — — ( 2,127 ) 173 — ( 2,234 )

Exchange rate fluctuation at December 31, 2022 — — ( 84 ) — ( 6 ) — — ( 12 ) ( 102 )

1 unchanged sentence

As of December 31, 2022 and 2021 there was no goodwill allocated for the Shoom segment.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Intangible assets at December 31, 2022 and 2021 consisted of the following (in thousands):

Gross Carrying Amount December 31, Accumulated Amortization December 31, Remaining Weighted Average Useful Life

2021 2020 2021 2020

December 31, Remaining Weighted Average Useful Life

Gross Amount Accumulated Amortization Impairment Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount

IP Agreement $ 162 $ ( 91 ) $ — $ 71 $ 172 $ ( 54 ) $ 118 1.75

5 unchanged sentences

Totals $ 39,324 $ ( 12,412 ) $ ( 4,629 ) $ 22,283 $ 40,433 $ ( 6,955 ) $ 33,478

The Company reviews intangible and other long-lived assets for impairment on an asset group basis on December 31 of each year and whenever events or changes in circumstances indicate the carrying value of intangibles and other long-lived assets may not be recoverable.

During the year ended December 31, 2022, the Company assessed its long-lived asset groups for impairment due to qualitative triggering events that consisted of missing operating projections, a sustained decrease in stock price, and planned divestitures to sell and/or dispose of long-lived assets before the end of their useful lives.

Therefore, the Company calculated the fair value of each asset group’s long-lived assets by utilizing fair value methodologies that are most applicable to each specific asset group.

These fair value methodologies included an income based approach, a market based approach and a cost based approach.

The Company compared the fair value of each asset group’s long-lived assets to their carrying value as of December 31, 2022.

The Company determined that the carrying value of the long-lived assets included in the SAVES and Indoor Intelligence segments were greater than their fair values as of December 31, 2022.

Therefore, an impairment loss of $ 1.5 million and $ 3.1 million was recorded in the SAVES and Indoor Intelligence segments as of December 31, 2022.

Aggregate Amortization Expense:

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Aggregate amortization expense for the years ended December 31, 2022 and 2021 were $ 6.1 million and $ 5.1 million, respectively.

2 unchanged sentences

2028 and thereafter 5,014

Total $ 33,478

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 14 - Other Long Term Investments

In 2020, the Company paid $ 1.8 million for 600,000 Class A Units and 2,500,000 Class B Units of Cardinal Ventures Holdings LLC, (“CVH”).

CVH is a Delaware limited liability company formed to conduct any business, enterprise or activity permitted to owning certain interests in a sponsor of a special purpose acquisition company (“SPAC”).

In 2020, the Company paid $ 1.8 million for 599,999 Class A Units and 2,500,000 Class B Units of Cardinal Ventures Holdings LLC, a Delaware limited liability (“CVH”).

The Company is a member of CVH.

CVH owns certain interests in KINS Capital, LLC, the sponsor entity (the “Sponsor”) to KINS Technology Group Inc., a Delaware corporation and special purpose acquisition company ("KINS") with which the Company entered into the Business Combination (see “Enterprise Apps Spin-off and Business Combination” under Note 1 above and “Recent Events - Enterprise Apps Spin-off and Business Combination” section under Part II, Item 7 herein for more details).

The $ 1.8 million purchase price was paid on October 12, 2020 and therefore is the date the purchase of the Units was closed.

On December 16, 2020, the Company increased its capital contribution by $ 0.7 million in exchange for an additional 700,000 Class B Units.

It is anticipated that the Contribution will be used by CVH to fund the Sponsor's purchase of securities in the SPAC.

The agreement provides that each Class A Unit and each Class B Unit represents the right of the Company to receive any distributions made by the Sponsor on account of the Class A Interests and Class B Interests, respectively, of the Sponsor.

As described in Note 1, the Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income.

During the period January 1, 2021 to December 31, 2021, CVH had no operating results as CVH is a holding company.

CVH only contains units and has not been allocated shares of the SPAC, therefore CVH is not allocating any portion of income or expense incurred by the SPAC.

The capital contribution was used by CVH to fund the Sponsor's purchase of securities in KINS.

The underlying subscription agreement provides that each Class A Unit and each Class B Unit represents the right of the Company to receive any distributions made by the Sponsor on account of the Class A Interests and Class B Interests, respectively, of the Sponsor.

The Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income.

During the period January 1, 2021 to December 31, 2021 and January 1, 2022 to December 31, 2022, CVH had no operating results as CVH is a holding company.

CVH only contains units and has not been allocated shares of KINS, therefore CVH is not allocating any portion of income or expense incurred by KINS.

As such, there was no share of earnings recognized by the Company in its statement of operations on its proportional equity investment.

4 unchanged sentences

CVH LLC Class B 38.4 % Units

Inpixon’s investment in equity method eligible entities are represented on balance sheet as an asset of $ 2.5 million as of December 31, 2021 and December 31, 2020.

The Company performed a valuation over the CVH units and determined that the Company's investment in CVH is impaired.

The Company believes that the impairment is other than temporary, due to the significant difference between the carrying value and fair value and the Company's plan to dispose of the investment in February 2023, which plan was carried out (See below and see Note 32).

Therefore, the Company recognized an impairment on the Company's investment in CVH of approximately $ 1.8 million as of December 31, 2022.

Inpixon’s investment in equity method eligible entities are represented on the balance sheet as an asset of $ 0.7 million and $ 2.5 million as of December 31, 2022 and December 31, 2021, respectively.

Ownership interest in equity method eligible entities did not change from the year ended December 31, 2021 to December 31, 2022.

On July 1, 2022, the Company loaned $ 150,000 to CVH.

The loan bears no interest and is due and payable in full on the earlier of:

(i) the date by which KINS has to complete a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “business combination”), and (ii) immediately prior to the date of consummation of the business combination of KINS, unless accelerated upon the occurrence of an event of default.

Nadir Ali, the Company’s Chief Executive Officer and director, is also a member in CVH through 3AM, LLC, which is a member of CVH, and which may, in certain circumstances, be entitled to manage the affairs of CVH.

As a result of the closing of the Business Combination, the loan was repaid on March 15, 2023.

On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees and directors (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020.

Note 15 - Deferred Revenue

Deferred revenue as of December 31, 2021 and 2020 consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Deferred revenue as of December 31, 2022 and 2021 consisted of the following (in thousands):

As of December 31,

18 unchanged sentences

Debt as of December 31, 2022 and 2021 consisted of the following (in thousands):

Short-Term Debt Interest Rate Maturity 2021 2020

Short-Term Debt Maturity 2022 2021

March 2020 10 % Note

3/18/2023 $ — $ 3,251

July 2022 Promissory Note (net of $760 debt discount) 7/22/2023 6,045 —

Dec 2022 Promissory Note (net of $1,880 debt discount) 12/30/2023 6,520 —

Third party note payable 6/30/2023 1,078 239

Unamortized Debt Discount — ( 254 )

Total Short-Term Debt $ 13,643 $ 3,490

Interest expense on the short-term debt totaled approximately $ 0.5 million and $ 0.7 million and approximately $ 0.2 million and $ 1.6 million was amortized to interest expense from the combined amortization of deferred financing costs and note discounts recorded at issuance for the Short Term Debt for the periods ending December 31, 2021 and 2020, respectively.

Interest expense on the short-term debt totaled approximately $ 1.1 million and $ 0.7 million which is inclusive of approximately $ 0.5 million and $ 0.2 million that was amortized to interest expense from the combined amortization of deferred financing costs and note discounts recorded at issuance for the Short Term Debt for the periods ending December 31, 2022 and 2021, respectively.

Notes Payable

7 unchanged sentences

Beginning on the date that is 6 months from the issuance date and at the intervals indicated below until the March 2020 10 % Note is paid in full, the holder shall have the right to redeem up to an aggregate of 1/3 of the initial principal balance of the March 2020 10 % Note each month by providing written notice delivered to the Company;

provided, however, that if the holder does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the holder to redeem in any future month in addition to such future month’s monthly redemption amount.

provided, however, that if the holder

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the holder to redeem in any future month in addition to such future month’s monthly redemption amount.

Upon receipt of any monthly redemption notice, the Company shall pay the applicable monthly redemption amount in cash to the holder within five business days of the Company’s receipt of such Monthly Redemption Notice.

7 unchanged sentences

and (ii) exchange the partitioned note for the delivery of 11,919 shares of the Company’s Common Stock, at an effective price per share equal to $ 125.85 .

The Company analyzed the exchange of the principal under the March 2020 10 % Note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded approximately a $ 0.03 million loss on the exchange of debt for equity as a separate item in the other income/expense section of the condensed consolidated statements of operations for the year ended December 31, 2021.

The Company analyzed the exchange of the principal under the March 2020 10 % Note as an extinguishment and compared the net carrying value of the debt being extinguished to the reacquisition price (shares of common stock being issued) and recorded approximately a $ 0.03 million loss on the exchange of debt for equity as a separate item in the other income/expense section of the consolidated statements of operations for the year ended December 31, 2021.

The Company entered into an exchange agreement with Iliad which afforded a free trading date of July 1, 2021, pursuant to which the Company and Iliad agreed to:

2 unchanged sentences

Third Party Note Payable

On October 29, 2021, Game Your Game entered into a promissory note with an individual whereby it received $ 0.3 million for funding of outside liabilities and working capital needs.

The promissory note has a interest rate of 8 % and is due on or before December 31, 2022.

As of December 31, 2021 the balance owed under the note was $ 0.3 million.

Note 21 - Capital Raises

March 2020 Distribution Agreement

On March 3, 2020, the Company entered into an Equity Distribution Agreement (“EDA”) with Maxim Group LLC (“Maxim”) under which the Company may offer and sell shares of our common stock in connection with an at-the-market equity facility (“ATM”) in an aggregate offering amount of up to $ 50 million, which was increased on June 19, 2020 to $ 150 million pursuant to an amendment to the EDA, from time to time through Maxim, acting exclusively as our sales agent.

The Company intends to use the net proceeds of the ATM primarily for working capital and general corporate purposes.

The Company may also use a portion of the net proceeds to invest in or acquire businesses or technologies that it believes are complementary to its own, although the Company has no current plans, commitments or agreements with respect to any acquisitions as of the date of this filing.

Maxim will be entitled to compensation at a fixed commission rate of 4.0 % of the gross sales price per share sold for the initial $ 50 million of shares and 3.25 % for any sales in excess of such amount.

In addition, the Company has agreed to reimburse Maxim for its costs and out-of-pocket expenses incurred in connection with its services, including the fees and out-of-pocket expenses of its legal counsel.

The Company is not obligated to make any sales of the shares under the EDA and no assurance can be given that the Company will sell any shares under the EDA, or if it does, as to the price or amount of shares that the Company will sell, or the dates on which any such sales will take place.

The EDA will continue until the earliest of (i) December 3, 2021, (ii) the sale of shares having an aggregate offering price of $ 150 million, and (iii) the termination by either Maxim or the Company upon the

On February 1, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.5 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.5 million;

and (ii) exchange the partitioned note for the delivery of 15,889 shares of the Company’s common stock, at an effective price per share equal to $ 31.47 .

On February 18, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.4 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.4 million;

and (ii) exchange the partitioned note for the delivery of 12,885 shares of the Company’s common stock, at an effective price per share equal to $ 27.17 .

On March 15, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to $ 0.7 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by $ 0.7 million;

and (ii) exchange the partitioned note for the delivery of 28,698 shares of the Company’s common stock, at an effective price per share equal to $ 22.65 .

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 21 - Capital Raises (continued)

provision of 15 days written notice or otherwise pursuant to the terms of the EDA.

The EDA was mutually terminated by the parties on February 12, 2021.

During the year ended December 31, 2020 under an at-the-market (“ATM”) program, the Company sold an aggregate of 33,416,830 shares of common stock, at a weighted average price of approximately $ 1.45 per share resulting in net proceeds of approximately $ 46.1 million to us after deduction of sales commissions equal to 4.0 % of the gross sales and other offering expenses.

Effective as of March 16, 2022, we entered into a third amendment (the “Third Amendment”) to the March 2020 10 % Note which was accounted for as a modification.

Pursuant to the terms of the Third Amendment, the maturity date of the March 2020 10 % Note was extended from March 18, 2022 to March 18, 2023 (the “Maturity Date Extension”).

In exchange for the Maturity Date Extension, we agreed to pay a 2 % extension fee in the amount of approximately $ 0.06 million (the “Extension Fee”), which was added to the outstanding balance of the March 2020 10 % Note.

On May 17, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to approximately $ 0.3 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.3 million;

and (ii) exchange the partitioned note for the delivery of 15,256 shares of the Company’s common stock, at an effective price per share equal to $ 16.50 .

On May 31, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

and (ii) exchange the partitioned note for the delivery of 19,806 shares of the Company’s common stock, at an effective price per share equal to $ 12.75 .

On July 1 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to approximately $ 0.4 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.4 million;

and (ii) exchange the partitioned note for the delivery of 32,074 shares of the Company’s common stock, at an effective price per share equal to $ 10.91 .

On July 11, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

and (ii) exchange the partitioned note for the delivery of 33,949 shares of the Company’s common stock, at an effective price per share equal to $ 11.78 .

On August 4, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

and (ii) exchange the partitioned note for the delivery of 25,691 shares of the Company’s common stock, at an effective price per share equal to $ 11.68 .

On September 9, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

(i) partition a new promissory note in the form of the March 2020 10 % Note equal to approximately $ 0.2 million and then cause the outstanding balance of the March 2020 10 % Note to be reduced by approximately $ 0.2 million;

and (ii) exchange the partitioned note for the delivery of 19,871 shares of the Company’s common stock, at an effective price per share equal to $ 10.07 .

On October 17, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the Company and Iliad agreed to:

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

exchange the partitioned note for the delivery of 83,682 shares of the Company’s common stock, at an effective price per share equal to $ 4.78 .

Subsequent to year end, the Company entered into additional exchange agreements with Illiad and the note has been satisfied in full.

See Note 32 for details.

July 2022 Note Purchase Agreement and Promissory Note

On July 22, 2022, the Company entered into a note purchase agreement (the "Purchase Agreement") with Streeterville Capital, LLC (the “Holder”), pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note (the “July 2022 Note”) in an aggregate initial principal amount of $ 6.5 million (the “Initial Principal Amount”), which is payable on or before the date that is 12 months from the issuance date (the “Maturity Date”).

The Initial Principal Amount includes an original issue discount of $ 1.5 million and $ 0.02 million that the Company agreed to pay to the Holder to cover the Holder’s legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the Note, the Holder paid an aggregate purchase price of $ 5.0 million (the “Transaction”).

Interest on the Note accrued at a rate of 10 % per annum, which is payable on the maturity date.

We may pay all or any portion of the amount owed earlier than it is due;

provided that in the event we may elect to prepay all or any portion of the outstanding balance, it shall pay to the Holder 115 % of the portion of the outstanding balance we may elect to prepay.

Beginning on the date that is 6 months from the issue date and at the intervals indicated below until the Note is paid in full, the Holder shall have the right to redeem up to an aggregate of 1/3 of the initial principal balance of the Note for cash each month.

The July 2022 Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22 %.

Upon the occurrence of an event of default (except default due to the occurrence of bankruptcy or insolvency proceedings), the Holder may, by written notice, declare all unpaid principal, plus all accrued interest and other amounts due under the July 2022 Note to be immediately due and payable.

Upon the occurrence of bankruptcy-related event of default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the July 2022 Note will become immediately due and payable at the mandatory default amount.

Under the terms of the July 2022 Note, if the note is still outstanding after 6 months from the issuance date, or as of January 22, 2023, a 10 % monitoring fee would be added to the balance of the note.

On January 31, 2023, the Holder agreed to reduce the one time monitoring fee from 10 % to 5 %.

The Company accrued the pro-rata portion of the monitoring fee of $ 0.3 million as of December 31, 2022 which added to the note balance.

December 2022 Note Purchase Agreement and Promissory Note

On December 30, 2022, we entered into a note purchase agreement with Streeterville Capital, LLC (the "Holder"), pursuant to which we agreed to issue and sell to the Holder an unsecured promissory note (the "December 2022 Note") in an aggregate initial principal amount of $ 8.4 million, which is payable on or before the date that is 12 months from the issuance date.

The initial principal amount of includes an original issue discount of $ 1.9 million and $ 0.02 million that we agreed to pay to the Holder to cover the Holder's legal fees, accounting costs, due diligence, monitoring and other transaction costs.

In exchange for the Note, the Holder paid an aggregate purchase price of $ 6.5 million.

Interest on the December 2022 Note accrues at a rate of 10 % per annum and is payable on the maturity date or otherwise in accordance with the December 2022 Note.

We may pay all or any portion of the amount owed earlier than it is due;

provided that in the event we may elect to prepay all or any portion of the outstanding balance, it shall pay to the Holder 115 % of the portion of the outstanding balance we may elect to prepay.

Beginning on the date that is 6 months from the issuance date and at the intervals indicated below until the December 2022 Note is paid in full, the Holder shall have the right to redeem up to an aggregate of 1/6th of the initial principal balance of the December 2022 Note plus any interest accrued thereunder each month by providing written notice delivered to us;

provided, however, that if the Holder does not exercise any monthly redemption amount in its corresponding month then such monthly redemption amount shall be available for the Holder to redeem in any further month in addition to such future month's monthly redemption amount.

Upon receipt of any monthly redemption notice, we shall pay the applicable monthly redemption amount in cash to the Holder within five (5) business days of the Company's receipt of such monthly redemption notice.

The December 2022 Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22 %.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note to be immediately due and payable.

Upon the occurrence of bankruptcy-related event of default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the December 2022 Note will become immediately due and payable at the mandatory default amount.

Third Party Notes Payable

Game Your Game, the Company's subsidiary, entered into promissory notes with an individual whereby it received approximately $ 0.2 million on October 29, 2021, approximately $ 0.2 million on January 18, 2022, approximately $ 0.1 million on March 22, 2022, approximately $ 0.1 million on August 17, 2022, approximately $ 0.1 million on September 21, 2022, approximately $ 0.1 million on October 26, 2022, approximately $ 0.1 million on November 29, 2022, and approximately $ 0.1 million on December 22, 2022 for funding of liabilities and working capital needs.

All of the promissory notes have an interest rate of 8 % and are due on or before June 30, 2023.

As of December 31, 2022 the balance owed under the notes was $ 1.1 million.

Note 18 - Capital Raises

Registered Direct Offerings

Each 2020 Purchase Warrant and 2020 Pre-funded warrant is exercisable for one share of common stock, is immediately exercisable and will expire five years from the issuance date.

On December 23, 2020, the 2020 Pre-funded Warrants were exercised in full.

On January 24, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which it sold and issued in a registered direct offering, 77,334 shares of its common stock, and warrants to purchase up to 258,065 shares of common stock at an exercise price of $ 116.25 per share (the “January 2021 Purchase Warrants”) for a combined purchase price of $ 116.25 per share and pre-funded warrants to purchase up to 180,732 shares of common stock ("January 2021 Pre-funded Warrants") at an exercise price of $ 0.08 per share, at a purchase price of $ 116.18 per share.

28 unchanged sentences

The remaining warrants that are not subject to forfeiture are recorded within Stockholders' Equity as the remaining warrants are classified as freestanding instruments The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, were approximately $ 50.6 million.

The Company classified these warrants as equity resulting in a discount of $ 4.7 million.

All of the shares of Series 7 Convertible Preferred Stock were redeemed in March 2022 and 75 % of the related warrants were forfeited.

See Note 20 for Preferred Stock and Note 23 for Warrant details.

Note 22 - Common Stock

During the three months ended March 31, 2020, the Company issued 1,896,557 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 4.2 million under partitioned notes.

During the three months ended March 31, 2020, the Company issued 937,010 shares of common stock in connection with the ATM at per share prices between $ 1.23 and $ 2.11 , resulting in net proceeds to the Company of approximately after subtracting sales commissions and other offering expenses (See Note 21).

During the three months ended June 30, 2020, the Company issued 3,889,990 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 4.6 million under partitioned notes.

During the three months ended June 30, 2020, the Company issued 29,033,036 shares of common stock in connection with the ATM at per share prices between $ 1.13 and $ 2.02 , resulting in net proceeds to the Company of approximately $ 40.52 million after subtracting sales commissions and other offering expenses (See Note 21).

During the three months ended June 30, 2020, the Company issued 183,486 shares of common stock for the extinguishment of liability totaling approximately $ 0.2 million.

On August 19, 2020, the Company issued 480,000 shares of common stock to the security holders of Ten Degrees as part of an acquisition (See Note 5).

During the three months ended September 30, 2020, the Company issued 1,604,312 shares of common stock in connection with the ATM at per share prices between $ 1.5064 and $ 1.5134 , resulting in net proceeds to the Company of approximately $ 2.3 million after subtracting sales commissions and other offering expenses (See Note 21).

During the three months ended December 31, 2020, the Company issued 1,842,472 shares of common stock in connection with the ATM at per share prices between $ 1.0706 and $ 1.1793 , resulting in net proceeds to the Company of approximately $ 2.1 million after subtracting sales commissions and other offering expenses (See Note 21).

On March 22, 2022, the Company entered into a Securities Purchase Agreement with certain institutional investors named therein, pursuant to which the Company sold in a registered direct offering (i) 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 1,503,726 shares of common stock.

Each share of Series 8 Convertible Preferred Stock and the related Warrants were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value of each share of Series 8 Convertible Preferred Stock for an aggregate subscription amount of $ 50.0 million.

In connection with this offering, the Company filed a Certificate of Designation for the Series 8 Convertible Preferred Stock with the Nevada Secretary of State.

Each share of Series 8 Convertible Preferred Stock has a par value of $ 0.001 per share and stated value of $ 1,000 per share.

The shares of Series 8 Convertible Preferred Stock are convertible into shares of the Company’s common stock, at a conversion price of $ 35.38 per share.

Each share of Series 8 Convertible Preferred Stock is entitled to receive cumulative dividends, payable in the same form as dividends paid on shares of the Company’s common stock.

At any time beginning on October 1, 2022 and ending ninety 90 days thereafter, the holders of the Series 8 Convertible Preferred Stock have the right to redeem all or part of the shares held by such holder in cash for the redemption price equal to the stated value of such share, plus all accrued but unpaid dividends thereon and all liquidated damages and other costs, expenses or amounts due.

Upon redemption, the holder of the Series 8 Convertible Preferred Stock will forfeit 50 % of the warrants issued in connection therewith.

The holders of the Series 8 Convertible Preferred Stock shall vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company.

The Series 8 Convertible Preferred Stock and related warrants subject to forfeiture are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash and the warrants are an embedded feature for the Series 8 Convertible Preferred Stock.

The remaining warrants that are not subject to forfeiture are recorded within Stockholders' Equity as the remaining warrants are classified as freestanding instruments containing a total value of $ 5.6 million.

The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, were approximately $ 46.9 million.

See Note 20 for Preferred Stock and Note 23 for Warrant details.

During the quarter ended December 31, 2022, the Company received cash redemption notices from the holders of the Series 8 Convertible Preferred Stock issued on March 22, 2022, totaling 53,197.72 shares of Series 8 Convertible Preferred Stock for aggregate cash paid of approximately $ 53.2 million which were thereafter fully redeemed.

In conjunction with the redemption, 751,841 warrants were forfeited.

Between March 15, 2022 and March 22, 2022, the Company received cash redemption notices from the holders of the Series 7 Convertible Preferred Stock issued on September 15, 2021, totaling 49,250 shares of Series 7 Convertible Preferred Stock for aggregate cash required to be paid of approximately $ 49.3 million.

In addition, in accordance with the related purchase agreement, upon redemption of the Series 7 Convertible Preferred Stock, each holder forfeited 75 % of the related warrants that were issued.

Therefore, as of March 22, 2022, 49,250 shares of Series 7 Convertible Preferred Stock were redeemed and 394,000 related warrants were forfeited.

The Company noted about 71 % of the Series 7 Preferred Stock holders that redeemed

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 22 - Common Stock (continued)

During the three months ended December 31, 2020, the Company issued 1,076,676 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.2 million under partitioned notes.

During the three months ended December 31, 2020, the Company issued 5,000,000 shares of common stock in connection with the an offering of common stock and warrants pursuant to a Securities Purchase Agreement which resulted in net proceeds of $ 9.2 million.

(See Note 21)

During the three months ended December 31, 2020, the Company issued 3,000,000 shares of common stock in connection with the exchange of Pre-Funded Warrants (as defined in Note 26) offered under the Securities Purchase Agreement, resulting in net proceeds of $ 3,000 .

See Note 21 and Note 26 for further details.

Note 18 - Capital Raises (continued)

shares also participated as Series 8 Convertible Preferred Stock holders (“shared holders”).

The Company accounted for proceeds of the shared holders as a modification to the Series 7 and Series 8 Convertible Preferred Stock, as well as the related embedded warrants.

The total change in fair value as a result of modification related to the Preferred Stock amounted to $ 2.6 million which were recognized as a deemed dividend at the date of the modification, upon which will be amortized until the redemption period begins on October 1, 2022.

The total change in fair value as a result of modification related to the embedded warrants amounted to $ 1.5 million which was recognized as a deemed contribution at the date of the modification, upon which will be accreted until the redemption period begins on October 1, 2022.

On July 22, 2022, the Company entered into an Equity Distribution Agreement (the "Sales Agreement") with Maxim Group LLC (“Maxim”) under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 25 million (the “Shares”) from time to time through Maxim, acting exclusively as the Company’s sales agent (the “Offering”).

The Company intends to use the net proceeds of the Offering primarily for working capital and general corporate purposes.

The Company did not make any sales pursuant to the Sales Agreement as of December 31, 2022, however, has raised gross proceeds of approximately $ 15.4 million under the Sales Agreement as of March 14, 2023.

On October 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor named therein (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 253,112 shares of the Company’s common stock and warrants to purchase up to 3,846,153 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 5.85 per share.

The Purchase Warrants have an exercise price of $ 5.85 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 2,310,990 shares of common stock, in lieu of shares of common stock at the Purchaser’s election.

Each pre-funded warrant is exercisable for one share of common stock.

The purchase price of each pre-funded warrant was $ 5.849 , and the exercise price of each pre-funded warrant is $ 0.001 per share.

The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.

The Company raised net proceeds of $ 14.1 million after deduction of sales commissions and other offering expenses.

In October 2022, the Company issued 930,990 shares of common stock in connection with the exercise of 930,990 pre-funded warrants at $ 0.001 per share.

Note 19 - Common Stock

During the three months ended March 31, 2021, the Company issued 11,919 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.5 million under partitioned notes.

10 unchanged sentences

(See Note 6 ).

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 19 - Common Stock (continued)

During the three months ended June 30, 2021, the Company issued 62,308 shares of common stock net of 12,292 shares withheld for employee taxes for restricted stock granted in February 2021 at a par value of $ 0.001 per share.

5 unchanged sentences

During the three months ended December 31, 2021, 2,038 shares of common stock issued in connection with restricted stock grants were forfeited for employee taxes.

On January 28, 2022, the Company entered into an exchange agreement with the holder of certain existing warrants which were exercisable for an aggregate of 657,402 shares of the Company’s common stock.

Pursuant to the exchange agreement, the Company agreed to issue to the warrant holder an aggregate of 184,153 shares of common stock and rights to receive an aggregate of 52,513 shares of common stock in exchange for the existing warrants (the "Warrant Exchange").

On February 19, 2022, 12,802 shares of common stock issued in connection with restricted stock grants were withheld for employee taxes.

On March 3, 2022, the Company issued 144,986 shares of common stock to the sellers of the CXApp in connection with the satisfaction of an earnout payment.

(See Note 6).

During the three months ended March 31, 2022, the Company issued 57,472 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.5 million under partitioned notes.

During the three months ended June 30, 2022, the Company issued 35,062 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 0.5 million under partitioned notes.

(See Note 17).

During the three months ended September 30, 2022, the Company issued 111,585 shares of common stock under exchange agreements to settle outstanding balances totaling approximately $ 1.3 million under partitioned notes.

(See Note 17).

On October 12, 2022, the Company issued 52,513 shares of common stock in connection with the exercise of a right to shares of common stock granted as part of warrant exchange agreement entered into on January 28, 2022.

(See Note 23).

On October 17, 2022, the Company issued 83,682 shares of the Company's common stock under an exchange agreement to settle outstanding balances totaling approximately $ 0.4 million under partitioned notes.

(See Note 17).

During the three months ended December 31, 2022, the Company issued 930,990 shares of common stock in connection with the exercise of 930,990 pre-funded warrants at $ 0.001 per share.

Note 20 - Preferred Stock

29 unchanged sentences

Note 20 - Preferred Stock (continued)

As of December 31, 2021 there was 49,250 shares of Series 7 Convertible Preferred stock outstanding.

As of December 31, 2022 there were zero shares of Series 7 Convertible Preferred stock outstanding.

Series 8 Convertible Preferred Stock

On March 22, 2022, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada, amending the Company’s Articles of Incorporation, as amended, by establishing the Series 8 Convertible Preferred Stock, consisting of 53,197.7234 authorized shares, $ 0.001 par value per share and $ 1,000 stated value per share.

The holders of the Series 8 Convertible Preferred Stock have full voting rights and powers, except as otherwise required by the Articles of Incorporation, as amended, or applicable law.

The holders of Series 8 Convertible Preferred Stock are entitled to vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company.

Each holder of the Series 8 Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which the Series 8 Convertible Preferred Stock then held by such holder could be converted on the record date for the vote which is being taken, provided, however, that the voting power of a holder together with its Attribution Parties (as defined in the Certificate of Designation), may not exceed 19.99 % (or such greater percentage allowed by the Nasdaq Listing Rules without any shareholder approval requirements).

The Series 8 Convertible Preferred Stock is convertible into the number of shares of common stock, determined by dividing the aggregate stated value of the Series 8 Convertible Preferred Stock of $ 1,000 per share to be converted by $ 35.38 .

On March 22, 2022, the Company entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell in a registered direct offering (i) up to 53,197.7234 shares of Series 8 Convertible Preferred Stock and (ii) related warrants to purchase up to an aggregate of 1,503,726 shares of common stock (the “Warrants”).

Each share of Series 8 Convertible Preferred Stock and the related Warrants (see Note 18) were sold at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value for an aggregate subscription amount of $ 50.0 million.

The shares of Series 8 Convertible Preferred Stocks are recorded as Mezzanine Equity in the accompanying balance sheets as the holder has the option to redeem these shares for cash.

The aggregate net proceeds from the offering, after deducting the placement agent fees and other estimated offering expenses, was approximately $ 46.9 million.

The Company has elected to accrete the issuance costs, discount, and freestanding warrants through the date shares can be first be redeemed at the option of the holders, which is the sixth month anniversary of the original issuance date using the effective interest method.

During three months ended December 31 2022, the Company received cash redemption notices from the holders of the Series 8 Convertible Preferred Stock issued on March 22, 2022, totaling 53,197.72 shares of Series 8 Convertible Preferred Stock for aggregate cash required to be paid of approximately $ 53.2 million.

As of December 31, 2022, there were zero shares of Series 8 Convertible Preferred Stock outstanding.

Note 21 - Authorized Share Increase and Reverse Stock Split

On January 3, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada to effect a 1-for-45 reverse stock split of the Company’s issued and outstanding shares of common stock, effective as of January 7, 2020.

The consolidated financial statements and accompanying notes give effect to the 1-for-45 reverse stock split and increase in authorized shares as if they occurred at the first period presented.

On November 18, 2021, the Company filed a certificate of amendment to the Company’s articles of incorporation, as amended, with the Secretary of State of the State of Nevada to increase the number of authorized shares of Common Stock from 250,000,000 to 2,000,000,000 shares effective as of November 18, 2021.

On October 4, 2022, the Company filed a certificate of change with the Secretary of State of the State of Nevada to effect a reverse stock split of the Company's authorized and issued and outstanding shares of common stock, at a ratio of one (1) share of common stock for every seventy five (75) shares of common stock effective as of October 7, 2022 (the "Reverse Stock Split").

The Reverse Stock Split did not alter the par value of the Company's common stock or modify any voting rights or other terms of the common stock.

The Reverse Stock Split was primarily intended to bring the Company into compliance with the minimum bid price requirements for maintaining its listing on the Nasdaq Capital Market.

The Company has reflected the Reverse Stock Split on a retroactive basis herein, unless otherwise indicated.

The Company filed a certificate of amendment to the Company’s articles of incorporation, as amended, with the Secretary of State of the State of Nevada to increase the number of authorized shares of Common Stock from 26,666,667 to 500,000,000 shares effective as of November 29, 2022.

Note 22 - Stock Award Plans and Stock-Based Compensation

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

In September 2011, the Company adopted the 2011 Employee Stock Incentive Plan (the “2011 Plan”) which provides for the granting of incentive and non-statutory common stock options and stock based incentive awards to employees, non-employee directors, consultants and independent contractors.

6 unchanged sentences

The aggregate number of shares that may be awarded under the 2018 Plan as of December 31, 2022 is 49,000,000 .

As of December 31, 2021, 18,882,303 of options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 73 shares under our 2011 Plan), 4,182,692 of restricted stock grants were granted to employees of the Company under the 2018 Plan, and 16,935,079 options were available for future grant under the Option Plans.

As of December 31, 2022, 394,555 of options and restricted stock were granted to employees, directors and consultants of the Company (including 1 share outside of our plan and 57 shares under our 2011 Plan), and 48,605,503 options were available for future grant under the Option Plans.

Employee Stock Options

4 unchanged sentences

During the year ended December 31, 2022, the Company granted options under the 2018 Plan for the purchase of 132,669 shares of common stock to employees and consultants of the Company.

These options are 100% vested or vest pro-rata over 12 , 24 or 36 months, have a life of 10 years and an exercise price between $ 0.69 and $ 1.83 per share.

These options are 100 % vested or vest pro-rata over 12 , 24 or 36 months, have a life of 10 years and an exercise price between $ 39.74 per share.

The Company valued the stock options using the Black-Scholes option valuation model and the fair value of the awards was determined to be approximately $ 1.8 million.

The fair value of the common stock as of the grant date was determined to be between $ 0.69 and $ 1.83 per share.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 25 - Stock Award Plans and Stock-Based Compensation (continued)

The fair value of the common stock as of the grant date was determined to be between $ 39.74 per share.

On February 5, 2021, the Company issued 67 shares of common stock in connection with the cashless exercise of 195 employee stock options.

4 unchanged sentences

Key weighted-average assumptions used to apply this pricing model during the years ended December 31, 2022 and 2021 were as follows:

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

For the Years Ended December 31,

3 unchanged sentences

Expected volatility of underlying stock 37.24 % - 37.45 %

37.21 % - 38.15 %

Dividends assumption $ — $ —

20 unchanged sentences

Exercisable at December 31, 2022 57 234,776 1 234,834 $ 25,446.10 $ —

Exercisable at December 31, 2021 73 7,235,382 1 7,235,456 $ 15.19 $ —

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 25 - Stock Award Plans and Stock-Based Compensation (continued)

Restricted Stock Awards

6 unchanged sentences

On December 23, 2021, 2,037 of restricted stock award grants were forfeited to satisfy the employee portion of the payroll taxes required to be paid in connection with the grant of such awards.

During the years ended December 31, 2021 and 2020 the Company recorded a charge of approximately $ 8.6 million and — , respectively,for the amortization of vested restricted stock awards.

On February 19, 2022, 12,802 restricted stock grants were forfeited for employee taxes.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

During the years ended December 31, 2022 and 2021 the Company recorded a charge of approximately $ 0.8 million and $ 8.6 million, respectively, for the amortization of vested restricted stock awards.

The following table summarizes restricted stock-based award activity granted:

4 unchanged sentences

Balance, December 31, 2021 55,770 $ 135.00

Granted — $ —

Forfeited ( 12,802 ) $ 137.25

Balance, December 31, 2022 42,968 $ 134.26

The Company determined the fair value of these grants based on the closing price of the Company’s common stock on the respective grant dates.

The compensation expense is being amortized over the respective vesting periods.

Note 23 - Warrants

On November 25, 2020, Inpixon entered into a Securities Purchase Agreement with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 5,000,000 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 8,000,000 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 1.25 per share.

The Purchase Warrants have an exercise price of $ 1.25 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 3,000,000 shares of common stock (the “Pre-Funded Warrants” and, together with the 5,000,000 shares and the Purchase Warrants, the “Securities”), in lieu of shares of common stock at the Investor’s election.

Each Pre-Funded Warrant is exercisable for one share of common stock.

The purchase price of each Pre-Funded Warrant is $ 1.249 , and the exercise price of each Pre-Funded Warrant is $ 0.001 per share.

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

During the three months ended December 31, 2020, the Company issued 3,000,000 shares of common stock in connection with the exercise of 3,000,000 warrants at 0.001 per share.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 19,354,838 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 1.55 per share.

On January 24, 2021, Inpixon entered into a Securities Purchase Agreement with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering, 77,334 shares of the Company’s common stock, par value $ 0.001 per share, and warrants to purchase up to 258,065 shares of common stock (the “Purchase Warrants”) at a combined offering price of $ 116.25 per share.

The Purchase Warrants have an exercise price of $ 116.25 per share.

12 unchanged sentences

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

During the year ended December 31, 2021, the Company issued 106,667 shares of common stock in connection with the exercise of 106,667 Pre-Funded Warrants at an exercise price of $ 0.08 per share in connection with the February 12, 2021 Securities Purchase Agreement.

7 unchanged sentences

During the year ended December 31, 2021, the Company issued 92,670 shares of common stock in connection with the exercise of 92,670 pre-funded warrants at $ 0.08 per share in connection with the February 16, 2021 Securities Purchase Agreement.

On September 13, 2021, the Company entered into a Securities Purchase Agreement (the "Offering") with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 58,750 shares of the Company’s Series 7 Convertible Preferred Shares, par value $ 0.001 per share, which are convertible into 47,000,000 shares of

Each share and related warrants were sold together at a subscription amount of $ 920 , representing an original issue discount of 8 % of the Stated Value for an aggregate subscription amount of $ 54.1 million.

On January 28, 2022, the Company entered into an exchange agreement with the holder of certain existing warrants of the Company which were exercisable for an aggregate of 657,402 shares of the Company’s common stock.

The Company accounted for the exchange agreement as a warrant modification.

The Company determined the fair value of the existing warrants as if issued on the exchange agreement date and compared that to the fair value of the common stock issued.

The Company calculated the fair value of the existing warrants using a Black-Scholes Option pricing model and determined it to be approximately $ 12.00 per share.

The fair value of the common stock issued was based on the closing stock price of the date of the exchange.

The total fair value of the warrants prior to modification was greater than the fair value of the common stock issued, and therefore, there was no incremental fair value related to the exchange.

Between March 15 and March 22, 2022, we received cash redemption notices from the holders of the Company's Series 7 Convertible Preferred Stock issued on September 15, 2021, totaling 49,250 shares of Series 7 Convertible Preferred Stock for aggregate cash required to be paid of approximately $ 49.3 million.

In addition, upon redemption of the Series 7 Convertible Preferred Stock, each holder forfeited 75 % of the related warrants that were issued together with the Series 7 Convertible Preferred Stock (the "Series 7 Warrants").

394,000 corresponding warrants issued in connection with the issuance of the Series 7 Convertible Preferred Stock been forfeited and 232,675 related warrants remain outstanding.

On March 22, 2022, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed to issue and sell, in a registered direct offering sold an aggregate of 53,197.7234 shares of the Company’s Series 8 Convertible Preferred Shares, par value $ 0.001 per share, and warrants to purchase up to 1,503,726 shares of common stock.

Each share and related warrants were sold together at a subscription amount of $ 940 , representing an original issue discount of 6 % of the stated value for an aggregate subscription amount of $ 50.0 million.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

the Company’s common stock and warrants to purchase up to 47,000,000 shares of common stock.

On October 18, 2022, the Company entered into a Securities Purchase Agreement, pursuant to which the Company agreed to issue and sell, in a registered direct offering, 253,112 shares of the Company’s common stock and warrants to purchase up to 3,846,153 shares of common stock at a combined offering price of $ 5.85 per share.

The Purchase Warrants have an exercise price of $ 5.85 per share.

Each Purchase Warrant is exercisable for one share of common stock and will be immediately exercisable and will expire five years from the issuance date.

The Company also offered and sold to the Purchaser pre-funded warrants to purchase up to 2,310,990 shares of common stock, in lieu of shares of common stock at the Purchaser’s election.

Each pre-funded warrant is exercisable for one share of common stock.

The purchase price of each pre-funded warrant was $ 5.849 , and the exercise price of each pre-funded warrant is $ 0.001 per share.

The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.

During the three months ended December 31, 2022, the Company issued 930,990 shares of common stock in connection with the exercise of 930,990 pre-funded warrants from the October 2022 capital raise at $ 0.001 per share.

The following table summarizes the changes in warrants outstanding during the years ended December 31, 2022 and 2021:

17 unchanged sentences

The domestic and foreign components of loss before income taxes for the years ended December 31, 2022 and 2021 are as follows (in thousands):

For the Years Ended December 31,

Domestic $ ( 58,960 ) $ ( 24,387 )

Foreign ( 12,582 ) ( 4,883 )

Loss from Continuing Operations before Provision for Income Taxes $ ( 71,542 ) $ ( 29,270 )

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

For the Years Ended December 31,

Domestic $ ( 52,113 ) $ ( 58,960 )

Foreign ( 14,256 ) ( 12,582 )

Net Loss, before tax $ ( 66,369 ) $ ( 71,542 )

The income tax provision (benefit) for the years ended December 31, 2022 and 2021 consists of the following (in thousands):

39 unchanged sentences

Unrealized gain 14,557 12,876

Capital Research 1,587 —

Other 803 260

16 unchanged sentences

Based on the Company’s analysis, no ownership changes occurred during 2021.

The NOL available to offset future taxable income after 2020 ownership change is approximately $ 31.6 million.

A change in ownership did occur in March of 2022.

The NOL available to offset future taxable income after the 2022 ownership change is approximately $ 46.5 million.

The NOLs generated in 2017, $ 1.5 million, will expire beginning in December 31, 2037 if not utilized.

The remaining NOLs were generated after 2017 have an indefinite life and do not expire.

As of December 31, 2021 and 2020, Inpixon Canada, which was acquired on April 18, 2014 as part of the AirPatrol Merger Agreement, had approximately $ 20.9 million and $ 16.8 million, respectively, of Canadian NOL carryovers available to offset future taxable income.

These NOLs, if not utilized, begin expiring in the year 2023.

The NOLs as of December 31, 2021 include Jibestream, which was acquired on August 15, 2019 and amalgamated with Inpixon Canada effective January 1, 2020.

The remaining NOLs generated after 2017 have an indefinite life and do not expire.

The NOLs as of December 31, 2022 that do not expire are approximately $ 45.6 million.

As of December 31, 2022 and 2021, Inpixon Canada, which was acquired on April 18, 2014 as part of the AirPatrol Merger Agreement, had approximately $ 24.6 million and $ 20.9 million, respectively, of Canadian NOL carryovers available to offset

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

future taxable income.

These NOLs, if not utilized, begin expiring in the year 2023.

The NOLs as of December 31, 2021 include Jibestream, which was acquired on August 15, 2019 and amalgamated with Inpixon Canada effective January 1, 2020.

As of December 31, 2022 and 2021, Nanotron GmbH, which was acquired on October 5, 2020, had approximately $ 44.1 million and $ 44.3 million, respectively, of German NOL carryovers available to offset future taxable income.

Although these NOLs do not expire, minimum taxation restrictions apply such that only a percentage of taxable income may be offset by NOL carryovers.

As of December 31, 2021, Intranav GmbH, which was acquired on December 8, 2021, had approximately $ 7.1 million German NOL carryovers available to offset future taxable income.

As of December 31, 2022 and 2021, Intranav GmbH, which was acquired on December 8, 2021, had approximately $ 8.6 million and $ 7.1 million, respectively, of German NOL carryovers available to offset future taxable income.

Although these NOLs do not expire, minimum taxation restrictions apply such that only a percentage of taxable income may be offset by NOL carryovers.

As of December 31, 2021, Active Mind Technology LTD, which was acquired on April 9, 2021 as part of the acquisition of Game Your Game Inc., had approximately $ 11.6 million Irish NOL carryovers available to offset future taxable income.

As of December 31, 2022 and 2021, Active Mind Technology LTD, which was acquired on April 9, 2021 as part of the acquisition of Game Your Game Inc., had approximately $ 11.8 million and $ 11.6 million, respectively, of Irish NOL carryovers available to offset future taxable income.

These NOLs have an indefinite life and do not expire.

As of December 31, 2022, Inpixon Philippines, Inc, which was organized on April 12, 2022 , had approximately $ 0.1 million of Philippine NOL carryovers available to offset future taxable income.

These NOLs, if not utilized, begin expiring in the year 2026.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

3 unchanged sentences

A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to Inpixon, Inpixon Canada, Nanotron GmbH, Intranav GmbH and Active Mind Technology LTD and has, therefore, established a full valuation allowance as of December 31, 2021 and 2020.

After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets with respect to Inpixon, Game Your Game, Inpixon Canada, Nanotron GmbH, Intranav GmbH, Active Mind Technology LTD, and Inpixon Philippines and has, therefore, established a full valuation allowance as of December 31, 2022 and 2021.

As of December 31, 2022 and 2021, the change in valuation allowance was $ 12.4 million and $ 4.4 million, respectively.

2 unchanged sentences

ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company is required to file income tax returns in the United States (federal), Canada, India, Germany, United Kingdom, Ireland, and in various state jurisdictions in the United States.

The Company is required to file income tax returns in the United States (federal), Canada, India, Germany, United Kingdom, Ireland, Philippines and in various state jurisdictions in the United States.

Based on the Company’s evaluation, it has been concluded that there are no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements for the years ended December 31, 2022 and 2021.

9 unchanged sentences

The tax years that remain open and subject to India reassessment are tax years beginning March 31, 2017.

The German tax authorities may reassess taxes generally four years from the end of the calendar year in which the return is filed.

The tax years that remain open and subject to German reassessment are 2015 – 2021.

In Ireland, assessments must generally be made within four years when returns are filed.

The tax years that remain open and subject to Irish reassessment are 2017 – 2021.

On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic.

Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted.

The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2020 to permit additional expensing of interest (ii) enacting a technical correction so that

The German tax authorities may reassess taxes generally four years

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits.

The CARES Act did not have a material impact on the Company

from the end of the calendar year in which the return is filed.

The tax years that remain open and subject to German reassessment are 2018 – 2022.

In Ireland, assessments must generally be made within four years when returns are filed.

The tax years that remain open and subject to Irish reassessment are 2018 – 2022.

In general, Philippine Tax Commissioner may reassess taxes three years from the date the original notice of assessment was issued.

The tax years that remain open and subject to Philippine reassessment are 2022.

Note 25 - Credit Risk, Concentrations, and Segment Reporting

3 unchanged sentences

The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits.

Cash is also maintained at foreign financial institutions for its Canadian subsidiary, UK subsidiary, German subsidiaries and its majority-owned India subsidiary.

Cash is also maintained at foreign financial institutions for its Canadian subsidiary, UK subsidiary, Philippine subsidiary, German subsidiaries and its majority-owned India subsidiary.

Cash in foreign financial institutions as of December 31, 2022 and 2021 was immaterial.

The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash.

The following table sets forth the percentages of revenue derived by the Company from those customers, which accounted for at least 10% of revenues during the years ended December 31, 2021 and 2020 (in thousands):

For the Year Ended December 31, 2021 For the Year Ended December 31, 2020

Customer A — — % 2,460 26 %

Customer B — — % 1,221 13 %

The Company did not have any customer accounted for at least 10% of revenues during the years ended December 31, 2022 and 2021.

As of December 31, 2022, two customers represented approximately 10 % and 10 % of total accounts receivable.

As of December 31, 2021, no customer accounted for at least 10% of total accounts receivable.

As of December 31, 2020, Customer C represented approximately 18 % and Customer D represented approximately 11 % of total accounts receivable.

As of December 31, 2021, one vendor represented approximately 33 % of total gross accounts payable.

Purchases from this vendor during the year ended December 31, 2021 was $ 0.4 million.

As of December 31, 2022, two vendors represented approximately 17 % and 12 % of total gross accounts payable.

Purchases from these vendors during the year ended December 31, 2022 was $ 1.4 million and $ 0.9 million, respectively.

As of December 31, 2021, one vendor represented approximately 33 % of total gross accounts payable.

Purchases from this vendor during the year ended December 31, 2021 was $ 0.4 million.

For the year ended December 31, 2021, three vendors represented approximately 21 %, 18 %, and 17 % of total purchases.

For the year ended December 31, 2022, one vendor represented approximately 23 % of total purchases.

For the year ended December 31, 2021, three vendors represented approximately 21 %, 18 %, and 17 % of total purchases.

6 unchanged sentences

The historical segment information has been recast to conform to the current segment structure.

Gross profit and income (loss) from operations are the primary measures of segment profitability used by the Company’s CODM.

Revenue, gross profit, and income (loss) from operations by segment consisted of the following (in thousands):

INPIXON AND SUBSIDIARIES

2 unchanged sentences

Note 25 - Credit Risk and Concentration (continued)

Gross profit and income (loss) from operations are the primary measures of segment profitability used by the Company’s CODM.

Revenue, gross profit, and income (loss) from operations by segment consisted of the following (in thousands):

For the Years Ended December 31,

13 unchanged sentences

Shoom 778 946

Income (loss) from operations by Segment $ ( 72,617 ) $ ( 23,794 )

Loss from operations by Segment $ ( 56,700 ) $ ( 72,743 )

The reporting package provided to the Company's CODM does not include the measure of assets by segment as that information isn't reviewed by the CODM when assessing segment performance or allocating resources.

5 unchanged sentences

We classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy.

The Company's assets measured at fair value consisted of the following at December 31, 2022 and December 31, 2021:

Fair Value at December 31, 2022

Total Fair Value Level 1 - Quoted Prices in Active Markets for Identical Assets Level 2 - Significant Other Observable Inputs Level 3 - Significant Unobservable Inputs

Short-term investments — — — —

Investments in equity securities 330 319 — 11

Total assets $ 330 $ 319 $ — $ 11

INPIXON AND SUBSIDIARIES

4 unchanged sentences

Total Fair Value Level 1 - Quoted Prices in Active Markets for Identical Assets Level 2 - Significant Other Observable Inputs Level 3 - Significant Unobservable Inputs

Related party loan-held for sale (net) $ — $ — $ — $ —

Short-term investments 43,125 43,125 — —

4 unchanged sentences

treasury bills with maturities greater than three months.

The fair values of the U.S.

The fair value of the U.S.

treasury bills are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy.

1 unchanged sentence

treasury bills is an actively traded market given the high level of daily trading volume.

treasury bills were sold by the Company during the year ended December 31, 2022.

Investments in equity securities are marked to market based on the respective publicly quoted market prices of the equity securities adjusted for liquidity.

The fair value was determined using a pricing model with certain significant unobservable market data inputs.

The Company had no Level 3 investments for the year ended December 31, 2020.

The fair value for Level 1 equity investments was determined using quoted prices of the security in active markets.

The fair value for Level 3 equity investments was determined using a pricing model with certain significant unobservable market data inputs.

Investments in debt securities are valued using an option pricing model under the income approach methodology as the investment does not have observable inputs of identical or comparable instruments.

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the year ended December 31, 2022 (in thousands):

1 unchanged sentence

Balance at beginning of year $ 1,838

Transfers in - FOXO Technologies, Inc.

convertible note 6,050

Transfers in - FOXO Technologies, Inc.

original issue discount on convertible note ( 550 )

Amortization of original issue discount on convertible note 206

Change in fair value on debt securities 791

Transfers out - FOXO Technologies, Inc.

conversion of note to marketable equity securities ( 6,497 )

Unrealized loss on equity securities ( 1,827 )

Balance at end of year $ 11

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 26 - Fair Value of Financial Instruments (continued)

Level 3 Investments

Balance at beginning of year $ —

Transfers in- Sysorex Securities Settlement Agreement

8 unchanged sentences

Note 27 - Foreign Operations

The Company’s operations are located primarily in the United States, Canada, India, Germany, and the United Kingdom.

The Company’s operations are located primarily in the United States, Canada, India, Germany, Philippines and the United Kingdom.

Revenues by geographic area are attributed by country of domicile of our subsidiaries.

The financial data by geographic area are as follows (in thousands):

States Canada India Germany United Kingdom Ireland Eliminations Total

States Canada India Germany United Kingdom Ireland Philippines Eliminations Total

For the Year Ended December 31, 2022:

19 unchanged sentences

Sysorex Note Purchase Agreement

Nadir Ali, the Company’s Chief Executive Officer and a member of its Board of Directors, was previously a member of the Board of Directors of Sysorex (resigned on May 14, 2021).

Nadir Ali, the Company’s Chief Executive Officer and a member of its Board of Directors, was previously a member of the Board of Directors of Sysorex until he resigned on May 14, 2021.

In addition, Nadir Ali entered into a consulting agreement with Sysorex, pursuant to which he agreed to provide certain business services specified in the agreement for the benefit of Sysorex in exchange for shares of Sysorex's common stock.

The consulting agreement was terminated on October 14, 2021.

On December 31, 2018, the Company and Sysorex entered into a note purchase agreement (the “Note Purchase Agreement”) pursuant to which the Company agreed to purchase from Sysorex at a purchase price equal to the Loan Amount (as defined below), a secured promissory note (the “Secured Note”) for up to an aggregate principal amount of $ 3 million (the “Principal Amount”), including any amounts advanced through the date of the Secured Note (the “Prior Advances”), to be borrowed and disbursed in increments (such borrowed amount, together with the Prior Advances, collectively referred to as the “Loan Amount”), with interest to accrue at a rate of 10 % percent per annum on all such Loan Amounts, beginning as of the date of disbursement with respect to any portion of such Loan Amount.

7 unchanged sentences

In addition, the Secured Note was amended to increase the default interest rate from 18 % to 21 % or the maximum rate allowable by law and to require a cash payment to the Company by Sysorex against the Loan Amount in an amount equal to no less than 6 % of the aggregate gross proceeds raised following the completion of any financing, or series of related financings, in which Sysorex raises aggregate gross proceeds of at least $ 5.0 million.

In accordance with the terms of the Systat License Agreement (see Note 4), on June 30, 2020, the Company partitioned a portion of the outstanding balance of the Secured Note into a new note in an amount equal to $ 3 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement ("Assignment Agreement").

In accordance with the terms of the Systat License Agreement on June 30, 2020, the Company partitioned a portion of the outstanding balance of the Secured Note into a new note in an amount equal to $ 3 million in principal plus accrued interest (the “Closing Note”) and assigned the Closing Note and all rights and obligations thereunder to Systat in accordance with the terms and conditions of that certain Promissory Note Assignment and Assumption Agreement ("Assignment Agreement").

An additional $ 2.3 million of the principal balance underlying the Sysorex Note was partitioned into a new note and assigned to Systat as consideration payable for the rights granted under the license as of December 31, 2020.

11 unchanged sentences

On February 20, 2019, the Company, Sysorex and Atlas Technology Group, LLC (“Atlas”) entered into a settlement agreement resulting in a net award of $ 941,796 whereby Atlas agreed to accept an aggregate of 16,655 shares of freely-tradable common stock of the Company in full satisfaction of the award.

The Company and Sysorex each agreed pursuant to the terms and conditions of that certain Separation and Distribution Agreement, dated August 7, 2018, as amended, that 50 % of the costs and liabilities related to the arbitration action would be shared by each party following the Spin-off.

As a result, Sysorex owes the Company $ 0.6 million for the settlement plus the interest accrued during the fiscal year ended December 31, 2020 of $ 0.1 million.

The total owed to the Company for this settlement as of December 31, 2021 and 2020 was $ 0 and $ 0.6 million, respectively.

The total owed to the Company for this settlement as of December 31, 2022 and 2021 was $ 0 .

The Company established a full valuation allowance against this balance as of December 31, 2020.

1 unchanged sentence

Sysorex Securities Settlement Agreement

On April 14, 2021, the Company entered into a Securities Settlement Agreement (the “SSA”) and a Rights Letter Agreement (the “RLA”), each with Sysorex, whereby Sysorex agreed to satisfy in full its outstanding debt, in the aggregate amount of $ 9,088,176 as of March 31, 2021, owed to the Company under that certain secured promissory note, originally dated December 31, 2018, as amended from time to time, and in connection with that certain settlement agreement, dated February 20, 2019, by and among the Company, Sysorex and Atlas Technology Group, LLC (the “Debt Settlement”).

On April 14, 2021, the Company entered into a Securities Settlement Agreement (the “SSA”) and a Rights Letter Agreement (the “RLA”), each with Sysorex, whereby Sysorex agreed to satisfy in full its outstanding debt, in the aggregate amount of $ 9.1 million as of March 31, 2021, owed to the Company under that certain secured promissory note, originally dated December 31, 2018, as amended from time to time, and in connection with that certain settlement agreement, dated February 20, 2019, by and among the Company, Sysorex and Atlas Technology Group, LLC (the “Debt Settlement”).

To effect the Debt Settlement, Sysorex agreed to issue to the Company (i) pursuant to the terms of the SSA, 12,972,189 shares of its common stock, $ 0.00001 par value per share, and (ii) rights to acquire 3,000,000 additional shares of its common stock pursuant to the terms of the RLA.

8 unchanged sentences

Also, under the RRA, if Sysorex determines to prepare and file with the SEC a registration statement relating to an offering of any of its equity securities, for its own account or the account of others, then the Company and the Holders will have the right, subject to certain limitations, to require Sysorex to include in such registration statement all or any part of the shares of common stock held by them.

Systat License Agreement

Nadir Ali, our Chief Executive Officer and a member of our Board, is a related party in connection with the acquisition of the Licenses as a result of his service as a director of Sysorex, the issuer of the Sysorex Note that was assigned in accordance with the terms and conditions of the License Agreement.

In addition, Tanveer Khader and Kareem Irfan, members of our Board, are also related parties in connection with the acquisition of the Licenses as a result of their respective employment relationships with the Systat Parties.

(See Note 4).

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Inpixon Canada Promissory Note

As of December 31, 2021, Inpixon Canada owed the Company $ 16.8 million.

This note is recorded as a current note receivable on the Company books, however, it is eliminated in the consolidated financial statements.

Cardinal Health Ventures Investment

5 unchanged sentences

(See Note 14).

Consulting Services

Kareem Irfan, a director of the Company, is providing consulting services to the Company in support of strategic initiatives for which he receives compensation of $ 10,000 a month under a consulting agreement effective through April 30, 2022 unless terminated earlier under the provisions of the agreement.

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Director Services Agreement

The Company and Kareem Irfan, a director of the Company, have amended Mr.

Irfan's Director Services Agreement on May 16, 2022 (as amended, the "Amended Director Services Agreement") to increase his quarterly compensation by an additional $ 10,000 per month as consideration for the additional time and efforts dedicated to the Company and management in support of the evaluation of strategic relationships and growth initiatives.

The Amended Director Services Agreement supersedes and replaces all prior agreements by and between the Company and Mr.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 29 - Leases

3 unchanged sentences

The monthly lease rate is approximately $ 2,774 and $ 1,083 per month.

The Company renewed the operating lease, which expires on July 31, 2023.

The new monthly lease rate is approximately $ 2,028 and $ 1,633 .

As part of the acquisition of IntraNav on December 9, 2021.

1 unchanged sentence

This lease expires on January 6, 2025 and the current lease rate is approximately $ 9,232 per month.

The Company entered into two new operating leases for its administrative office in Hyderabad, India and Manila, Philippines.

The Hyderabad, India and Manila, Philippines office lease expires on March 25, 2025 and May 14, 2025, respectively.

The Company has no other operating or financing leases with terms greater than 12 months.

3 unchanged sentences

Palo Alto, CA Office $ 630 $ 631

Encino, CA Office — 194

Hyderabad, India Office 342 359

6 unchanged sentences

Frankfurt, Germany Office 294 312

Manila, Philippines Office 247 —

Less accumulated amortization ( 1,550 ) ( 1,281 )

1 unchanged sentence

Lease expense for operating leases recorded in the balance sheet is included in operating costs and expenses and is based on the future minimum lease payments recognized on a straight-line basis over the term of the lease plus any variable lease costs.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statement of income for the period ended December 31, 2021 and 2020 was $ 1.2 million and $ 5.4 million, respectively.

Operating lease expenses, inclusive of short-term and variable lease expenses, recognized in our consolidated statements of operations for both years ended December 31, 2022 and 2021 was $ 1.2 million.

During the years ended December 31, 2022 and 2021, the Company recorded $ 0.7 million each year as rent expense to the right-of-use assets.

During the years ended December 31, 2022 and 2021, the Company recorded short-term and variable lease expenses of $ 0.2 million and $ 0.3 million each year, respectively.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 29 - Leases (continued)

Lease liability is summarized below (in thousands):

3 unchanged sentences

Long term portion $ 778 $ 1,108

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 32 - Leases (continued)

Maturity analysis under the lease agreement is as follows (in thousands):

3 unchanged sentences

Year ending December 31, 2026 98

Year ending December 31, 2026 103

Total $ 1,366

4 unchanged sentences

As of December 31, 2022, the weighted average remaining lease term is 2.79 and the weighted average discount rate used to determine the operating lease liabilities was 6.3 %.

Note 30 - Restructuring Activities

On September 21, 2022, Inpixon informed its employees that it was taking steps to streamline its operations and conserve cash resources.

These steps included layoffs which reduced Inpixon's global employee headcount by approximately 20 %.

The layoffs resulted in one-time expenses of approximately $ 0.8 million in the Indoor Intelligence segment which consisted of severance payouts to terminated employees and outplacement service expenses for the year ended December 31, 2022.

These expenses were included in the Company's total operating expenses on the Consolidated Statements of Operations with the unpaid restructuring costs included in accrued liabilities in the Consolidated Balance Sheets.

The Company recorded a Restructuring costs payable for costs incurred related to the restructuring activities noted above for costs incurred but not yet paid as of December 31, 2022.

A summary of the activity for the year ended December 31, 2022, is included below (in thousands):

Restructuring costs payable - January 1, 2022 $ —

Restructuring costs incurred 845

Restructuring costs paid ( 793 )

Restructuring costs payable - December 31, 2022 $ 52

Note 31 - Commitments and Contingencies

1 unchanged sentence

The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

2 unchanged sentences

There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

However, the performance of our Company's business, financial position, and results of operations or cash flows may be affected by unfavorable resolution of any particular matter.

Compliance with Nasdaq Continued Listing Requirement

On October 25, 2021, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock (“Common Stock”) for the prior 30 consecutive business days beginning on September 13, 2021, and ending on October 22, 2021, the Company no longer met the requirement to maintain a minimum bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until April 25, 2022, in which to regain compliance.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until April 25, 2022, in which to regain compliance ("Cure Period").

In order to regain compliance with the minimum bid price requirement, the closing bid price of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business.

On April 26, 2022, Nasdaq granted us an extension for an additional 180 calendar days beyond the Cure Period, or until October 24, 2022, if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

We effected a 1-for-75 reverse stock split of our common stock on October 7, 2022, and on November 1, 2022, we were informed by Nasdaq that we have regained compliance with the minimum bid price requirement and that we were back in compliance with the applicable Nasdaq continued listing criteria.

Note 32 - Subsequent Events

Game Your Game, the Company's subsidiary, entered into a promissory note with an individual whereby it received approximately 0.03 million on January 13, 2023 for funding of liabilities and working capital needs.

The promissory note has an interest rate of 8 % and is due on or before June 30, 2023.

On February 27, 2023, the Company entered into Limited Liability Company Unit Transfer and Joinder Agreements with certain of the Company’s employees (the “Transferees”), pursuant to which (i) the Company transferred all of its Class A Units of CVH (the “Class A Units”), an aggregate of 599,999 Class A Units, to the Transferees as bonus consideration in connection with each Transferee’s services performed for and on behalf of the Company as an employee, as applicable, which was approved by the board of directors during the quarter ended March 31, 2023 and (ii) each Transferee became a member of CVH and a party to the Amended and Restated Limited Liability Company Agreement of CVH, dated as of September 30, 2020.

During the quarter ended March 31, 2023, the Company exchanged approximately $ 0.9 million of the outstanding principal and interest under the March 2020 10 % Note Purchase Agreement and Promissory Note for 611,258 shares of the Company's common stock at prices from $ 1.09 to $ 1.682 per share, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

This note was full satisfied as of January 31, 2023.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

During 2023 through the date of this filing, the Company exchanged approximately $ 1.1 million of the outstanding principal and interest under the July 2022 Note Purchase Agreement and Promissory Note for 2,517,397 shares of the Company's common stock at prices from $ 0.3336 to $ 0.915 per share, calculated in accordance with Nasdaq's “minimum price” as defined by Nasdaq Listing Rule 5635(d).

During the quarter ended March 31, 2023, the Company sold 9,655,207 shares of common stock at share prices between $ 1.15 and $ 1.86 per share under an equity distribution agreement for gross proceeds of approximately $ 15.4 million.

During January 2023, the Company issued 1,380,000 shares of common stock in connection with the exercise of 1,380,000 pre-funded warrants at $ 0.001 per share in connection with the October 2022 registered direct offering.

On April 14, 2023, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days beginning on March 2, 2023, and ending on April 13, 2023, the Company no longer meets the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a period of 180 calendar days, or until October 11, 2023, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180-day period.

In the event that we do not regain compliance within this 180-day period, we may be eligible to seek an additional compliance period of 180 calendar days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq will provide us with notice that our Common Stock will be subject to delisting.

In the event that the Company does not regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that our common stock will be subject to delisting.

The letter does not result in the immediate delisting of our common stock from the Nasdaq Capital Market.

The Company intends to monitor the closing bid price of our common stock and consider its available options in the event that the closing bid price of our common stock remains below $1 per share.

Warrant Amendments

On February 28, 2023, the Company entered into warrant amendments (the “Warrant Amendments”) with certain holders (each, including its successors and assigns, a “Holder” and collectively, the “Holders”) of (i) those certain Common Stock Purchase Warrants issued by the Company in April 2018 (the “April 2018 Warrants”) pursuant to the registration statement on Form S-3 (File No.

333-204159), (ii) those certain Common Stock Purchase Warrants issued by the Company in September 2021 (the “September 2021 Warrants”) pursuant to the registration statement on Form S-3 (File No.

333-256827), and (iii) those certain Common Stock Purchase Warrants issued by the Company in March 2022 (the “March 2022 Warrants” and together with the April 2018 Warrants and the September 2021 Warrants, the “Existing Warrants”) pursuant to the registration statement on Form S-3 (File No.

Pursuant to the Warrant Amendments, the Company and the Holders have agreed to amend (i) the September 2021 Warrants and the March 2022 Warrants to provide that all of such outstanding warrants shall be automatically exchanged for shares of common stock of the Company, at a rate of 0.33 shares of Common Stock (the “Exchange Shares”) for each September 2021 Warrant or March 2022 Warrant, as applicable, and (ii) the April 2018 Warrants to remove the obligation of the Company to hold the portion of a Distribution (as defined in the April 2018 Warrants) in abeyance in connection with the Beneficial Ownership Limitation (as defined in the April 2018 Warrants).

In connection with the exchange for all of the then outstanding September 2021 Warrants and March 2022 Warrants as of the effective date of the Warrant Amendments, the Company issued 76,794 Exchange Shares and 248,124 Exchange Shares, respectively, resulting in the issuance of 324,918 Exchange Shares in the aggregate.

Enterprise Apps Spin-off and Business Combination

On March 14, 2023, Inpixon completed (the “Closing”) the separation (the “Separation”) of its enterprise apps business (including its workplace experience technologies, indoor mapping, events platform, augmented reality and related business solutions) (the “Enterprise Apps Business”) through a spin-off of CXApp Holding Corp., a Delaware corporation ("CXApp"), to certain holders of Inpixon securities as of March 6, 2023 (the “Record Date”) on a pro rata basis (the “Distribution” or “Enterprise Apps Spin-off”) and merger (the “Merger”) of CXApp with a wholly owned subsidiary of KINS Technology Group

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 34 - Correction of Previously Issued Financial Statements

The Company follows ASC Topic 250, Accounting Changes and Error Corrections, when accounting for accounting changes and errors in previously issued financial statements.

The former is a change in accounting principle, a change in accounting estimates or a change in reporting entity.

The latter is an error in recognition, measurement, presentation, or disclosure in financial statements resulting from mathematical mistakes, mistakes in the application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared.

Subsequent to the issuance of the Company’s consolidated and combined financial statements as of September 30, 2021 and 2020 (the “previously issued financial statements”), new information became available to management which required a re-evaluation of the Company’s historical application of ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC Topic 260, Earnings per Share (“ASC 260”) and concluded a accretion discount of the Series 7 preferred shares should have recorded been as a reduction to the Company’s Net Loss Attributable to Common Stockholders.

The error also impacted the company’s Net Loss Per Share- Basic and Diluted calculation.

Management evaluated the quantitative and qualitative impact of this accounting error and concluded it was not material to the Company’s previously issued financial statements.

Notwithstanding this conclusion, management has revised the accompanying consolidated financial statements and related disclosures included herein to correct this accounting error for all periods presented, as well as the accompanying footnotes affected by the accounting error, which include additional disclosure or corresponding revisions to the Consolidated Statements.

The correction of this accounting error had no effect on the Company’s previously reported revenues and operating loss.

The following tables summarize the effect of correcting this accounting error on the Company’s previously issued financial statements:

Consolidated Statement of Operations Information

For the Three Months Ended September 30, 2021 For the Nine Months Ended September 30, 2021

As Previously Issued Adjustment Corrected As Previously Issued Adjustment Corrected

Inc., a Delaware corporation (“KINS”), in a Reverse Morris Trust transaction (collectively, the “Transactions”) pursuant to (i) an Agreement and Plan of Merger, dated as of September 25, 2022, by and among Inpixon, KINS, CXApp, and KINS Merger Sub Inc.

(the "Merger Agreement") and (ii) a Separation and Distribution Agreement, dated as of September 25, 2022, among KINS, Inpixon, CXApp and Design Reactor, Inc.

(the "Separation Agreement”, and collectively with the Merger Agreement and the other related transaction documents, the “Transaction Agreements”).

In connection with the Closing, KINS was renamed CXApp Inc.

(“New CXApp”).

Pursuant to the Transaction Agreements, Inpixon contributed to CXApp cash and certain assets and liabilities constituting the Enterprise Apps Business, including certain related subsidiaries of Inpixon, to CXApp (the “Contribution”).

In consideration for the Contribution, CXApp issued to Inpixon additional shares of CXApp common stock such that the number of shares of CXApp common stock then outstanding equaled the number of shares of CXApp common stock necessary to effect the Distribution.

Pursuant to the Distribution, Inpixon shareholders as of the Record Date received one share of CXApp common stock for each share of Inpixon common stock held as of such date.

Pursuant to the Merger Agreement, each share of Legacy CXApp common stock was thereafter exchanged for the right to receive 0.09752221612415190 of a share of New CXApp Class A common stock (with fractional shares rounded down to the nearest whole share) and 0.3457605844401750 of a share of New CXApp Class C common stock (with fractional shares rounded down to the nearest whole share).

New CXApp Class A common stock and New CXApp Class C common stock are identical in all respects, except that New CXApp Class C common stock is not listed and will automatically convert into New CXApp Class A common stock on the earlier to occur of (i) the 180 th day following the closing of the Merger and (ii) the day that the last reported sale price of New CXApp Class A common stock equals or exceeds $ 12.00 per share for any 20 trading days within any 30 -trading day period following the closing of the Merger.

Upon the closing of the Transactions, Inpixon’s existing securityholders held approximately 50.0 % of the shares of New CXApp common stock outstanding.

As of the Closing, CXApp is expected to have approximately $ 10 million of net cash.

The transaction is expected to be tax-free to Inpixon and its stockholders for U.S.

federal income tax purposes.

The following unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2022 are presented as if the Enterprise Apps Spin-Off had occurred as of January 1, 2022 in that they reflect the reclassification of Enterprise Apps as a discontinued operation for all periods presented.

The following unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as of December 31, 2022 is presented as if the Enterprise Apps Spin-Off occurred on December 31, 2022.

The unaudited Pro Forma Condensed Consolidated Financial Statements are presented based on information currently available including certain assumptions and estimates.

They are intended for informational purposes only, and do not purport to represent what the Company’s financial position and operating results would have been had the Enterprise Apps Spin-Off and related events occurred on the dates indicated above, or to project the Company’s financial position or results of operations for any future date or period.

Furthermore, they do not reflect all actions that may be undertaken by the Company after the Enterprise Apps Spin-Off.

The unaudited Pro Forma Condensed Consolidated Financial Statements and the accompanying notes should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report for the fiscal year ended December 31, 2022.

In the enclosed unaudited Pro Forma Condensed Consolidated Statements of Operations and Balance Sheets, the amounts reflected in the columns presented are described below:

Inpixon and Subsidiaries Historical

This column reflects the Company’s historical financial statements for the periods presented and does not reflect any adjustments related to the Enterprise Apps Spin-Off and related events.

The Inpixon and Subsidiaries Historical Consolidated Balance Sheet as of December 31, 2022 and the Consolidated Statements of Operations for the year ended December 31, 2022 were derived from the Company’s audited Consolidated Financial Statements included in its Annual Report for the year ended December 31, 2022.

Enterprise Apps Discontinued Operations

The unaudited pro forma financial information related to the Enterprise Apps Discontinued Operations has been prepared in accordance with the discontinued operations guidance in Accounting Standards Codification 205, “Financial Statement Presentation” and therefore does not reflect what the Company’s or Enterprise Apps’ results of operations would have been on

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

a stand-alone basis and are not necessarily indicative of the Company’s or Enterprise Apps' future results of operations.

The information in the Enterprise Apps Discontinued Operations column in the unaudited Pro Forma Statements of Operations was prepared based on the Company’s annual audited financial statements.

The Company believes that the adjustments included within the Enterprise Apps Discontinued Operations column of the unaudited Pro Forma Condensed Consolidated Financial Statements are consistent with the guidance for discontinued operations in accordance with U.S.

Pro Forma Adjustments

The information in the “Pro Forma Adjustments” columns in the unaudited Pro Forma Condensed Consolidated Statements of Operations and the unaudited Pro Forma Condensed Consolidated Balance Sheets reflect additional pro forma adjustments which are further described in the accompanying notes.

The Pro Forma Adjustments are based on available information and assumptions that the Company’s management believes are reasonable, that reflect the impact of events directly attributable to the Enterprise Apps Spin-Off that are factually supportable, and for purposes of the Pro Forma Condensed Consolidated Statements of Operations, are expected to have a continuing impact on the Company.

The Pro Forma Adjustments do not reflect future events that may occur after the Enterprise Apps Spin-Off.

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

INPIXON AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of December 31, 2022

(In thousands, except number of shares and par value data)

Inpixon and Subsidiaries Historical

(a) Enterprise Apps Discontinued Operations

(b) Pro Forma Adjustments Note Pro Forma Inpixon and Subsidiaries Continuing Operations

Current Assets

Cash and cash equivalents $ 20,235 $ ( 6,308 ) $ ( 3,692 ) (c) $ 10,235

Accounts receivable, net of allowances 3,227 ( 1,338 ) — 1,889

Other receivables 359 ( 273 ) — 86

Inventory 2,442 — — 2,442

Note receivable 150 — — 150

Prepaid expenses and other current assets 3,453 ( 650 ) — 2,803

Total Current Assets 29,866 ( 8,569 ) ( 3,692 ) 17,605

Property and equipment, net 1,266 ( 202 ) — 1,064

Operating lease right-of-use asset, net 1,212 ( 681 ) — 531

Software development costs, net 1,752 ( 487 ) — 1,265

Investments in equity securities 330 — — 330

Long-term investments 716 — ( 716 ) (d) —

Intangible assets, net 22,283 ( 19,289 ) — 2,994

Other assets 210 ( 52 ) — 158

Total Assets $ 57,635 $ ( 29,280 ) $ ( 4,408 ) $ 23,947

Liabilities and Stockholders’ Equity

Current Liabilities

Accounts payable $ 2,557 $ ( 1,054 ) $ — $ 1,503

Accrued liabilities 4,355 ( 1,736 ) — 2,619

Operating lease obligation, current 477 ( 266 ) — 211

Deferred revenue 3,485 ( 2,162 ) — 1,323

Short-term debt 13,643 — — 13,643

Acquisition liability 197 ( 197 ) 197 (e) 197

Total Current Liabilities 24,714 ( 5,415 ) 197 19,496

Long Term Liabilities

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Operating lease obligation, noncurrent 778 ( 444 ) — 334

Other liabilities, noncurrent 28 ( 30 ) — ( 2 )

Total Liabilities 25,520 ( 5,889 ) 197 19,828

Commitments and Contingencies

Mezzanine Equity

Series 8 Convertible Preferred Stock- 53,197.7234 shares authorized, 0 issued and outstanding as of December 31, 2022.

Stockholders’ Equity

Preferred Stock -$0.001 par value;

5,000,000 shares authorized — — — —

Series 4 Convertible Preferred Stock - 10,415 shares authorized;

1 issued and outstanding as of December 31, 2022.

Series 5 Convertible Preferred Stock - 12,000 shares authorized;

126 issued and outstanding as of December 31, 2022.

Common Stock - $0.001 par value;

500,000,000 shares authorized;

3,570,894 issued and 3,570,893 outstanding as of December 31, 2022 4 — — 4

Additional paid-in capital 346,668 — — 346,668

Treasury stock, at cost, 1 share ( 695 ) — — ( 695 )

Accumulated other comprehensive income 1,061 — — 1,061

Accumulated deficit ( 314,841 ) ( 23,391 ) ( 4,605 ) (c), (d), (e) ( 342,837 )

Stockholders’ Equity Attributable to Inpixon 32,197 ( 23,391 ) ( 4,605 ) 4,201

Non-controlling Interest ( 82 ) — — ( 82 )

Total Stockholders’ Equity 32,115 ( 23,391 ) ( 4,605 ) 4,119

Total Liabilities, Mezzanine Equity and Stockholders’ Equity $ 57,635 $ ( 29,280 ) $ ( 4,408 ) $ 23,947

INPIXON AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

INPIXON AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31, 2022

(In thousands, except number of shares and par value data)

Inpixon and Subsidiaries Historical

(a) Enterprise Apps Discontinued Operations

(f) Pro Forma Adjustments Note Pro Forma Inpixon and Subsidiaries Continuing Operations

Revenues $ 19,418 $ ( 8,470 ) $ — $ 10,948

Cost of Revenues 5,489 ( 2,064 ) — 3,425

Gross Profit 13,929 ( 6,406 ) — 7,523

Operating Expenses

Research and development 17,661 ( 9,323 ) — 8,338

Sales and marketing 8,872 ( 5,096 ) 100 (g) 3,876

General and administrative 26,060 ( 11,571 ) 1,031 (g) 15,520

Acquisition-related costs 426 ( 16 ) — 410

Impairment of goodwill and intangibles 12,199 ( 5,540 ) — 6,659

Amortization of intangibles 5,411 ( 3,885 ) — 1,526

Total Operating Expenses 70,629 ( 35,431 ) 1,131 36,329

Loss from Operations ( 56,700 ) 29,025 ( 1,131 ) ( 28,806 )

Other Income (Expense)

Interest expense, net ( 673 ) ( 4 ) — ( 677 )

Other expense, net 692 1 — 693

Unrealized loss on equity securities ( 7,904 ) — — ( 7,904 )

Unrealized loss on equity method investment ( 1,784 ) — — ( 1,784 )

Total Other Expense ( 9,669 ) ( 3 ) — ( 9,672 )

Net Loss, before tax ( 66,369 ) 29,022 ( 1,131 ) ( 38,478 )

Income tax provision 65 153 218

Net Loss ( 66,304 ) 29,175 ( 1,131 ) ( 38,260 )

Net Loss Attributable to Non-controlling Interest ( 2,910 ) — — ( 2,910 )

Net Loss Attributable to Stockholders of Inpixon ( 63,394 ) 29,175 ( 1,131 ) ( 35,350 )

Accretion of Series 7 preferred stock ( 4,555 ) — — ( 4,555 )

Net Loss Attributable to Common Stockholders $ ( 33,640 ) $ ( 2,962 ) $ ( 36,602 ) $ ( 31,438 ) $ ( 2,962 ) $ ( 34,400 )

Net Loss Per Share - Basic and Diluted $ ( 0.29 ) $ ( 0.02 ) $ ( 0.31 ) $ ( 0.31 ) $ ( 0.03 ) $ ( 0.34 )

Note 35 - Subsequent Events

On January 8, 2022 the Company granted 9,945,000 stock options to employees, consultants and directors of the Company.

These options are 100% vested at grant or vest over 12 or 48 months, have a life of 10 years and an exercise price of $ 0.53 per share.

On January 28, 2022, the Company entered into an Exchange Agreement with the holder of certain existing warrants of the Company which were exercisable for an aggregate of 49,305,088 shares of the Company’s common stock.

Pursuant to the Exchange Agreement, the Company has agreed to issue to the Warrant Holder an aggregate of 13,811,407 shares of common stock and rights to receive an aggregate of 3,938,424 shares of common stock in exchange for the existing warrants.

On February 1, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 500,000 and then cause the outstanding balance of the Original Note to be reduced by

INPIXON AND SUBSIDIARIES

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

and (ii) exchange the partitioned note for the delivery of 1,191,611 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.4196 .

On February 18, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 350,000 and then cause the outstanding balance of the Original Note to be reduced by $ 350,000 ;

and (ii) exchange the partitioned note for the delivery of 966,317 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.3622 .

On February 19, 2022, 960,106 shares of common stock issued in connection with restricted stock grants were forfeited for employee taxes.

On March 3, 2022, we entered into a Second Amendment to the CXApp Stock Purchase Agreement with the Sellers' Representative, pursuant to which the parties agreed that withholding taxes payable by the Sellers, as applicable, in connection with the issuance of the Earnout Shares would be offset up to the aggregate amount payable to such Seller by the Company from the Holdback Amount and the Holdback Amount would be reduced by an equal amount.

On March 3, 2022, the Company issued 10,873,886 shares of Common Stock to the Sellers in connection with the satisfaction of the Earnout Payment.

Through March 15, 2022, the Company received notice of cash redemption from several holders of Series 7 Convertible Preferred Stock issued September 13, 2021 (as disclosed in Note 23).

The redemption period per the purchase agreement begins on March 15, 2022 and ends on June 14, 2022.

As of March 15, 2022, redemption notices totaling 33,000 preferred shares have been received for aggregate cash required to be paid of approximately $ 33.0 million.

In addition, in accordance with the purchase agreement, upon redemption of the preferred stock, each holder will forfeit 75 % of the common stock warrants that were issued.

Therefore, as of the date of this filing, 33,000 shares of Series 7 Convertible Preferred Stock have been redeemed and 19,800,000 warrants have been forfeited.

On March 15, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of that certain outstanding unsecured promissory note, issued on March 18, 2020 in an aggregate initial principal amount of $ 6,465,000 (the “Original Note”), pursuant to which the Company and the holder agreed to:

(i) partition a new promissory note in the form of the Original Note equal to $ 650,000 and then cause the outstanding balance of the Original Note to be reduced by $ 650,000 ;

and (ii) exchange the partitioned note for the delivery of 2,152,317 shares of the Company’s Common Stock, at an effective price per share equal to $ 0.3020 .

Effective as of March 16, 2022, we entered into a third amendment (the “Third Amendment”) to the Original Note.

Pursuant to the terms of the Third Amendment, the maturity date of the Original Note was extended from March 18, 2022 to March 18, 2023 (the “Maturity Date Extension”).

In exchange for the Maturity Date Extension, we agreed to pay a 2 % extension fee in the amount of $ 56,860.09 (the “Extension Fee”), which was added to the outstanding balance of the Original Note.

Following the application of the Extension Fee, as of March 16, 2022, the outstanding balance of the Original Note was $ 2,900,654.45 .

Accretion of Series 8 Preferred Stock ( 13,090 ) — — ( 13,090 )

Deemed dividend for the modification related to Series 8 Preferred Stock ( 2,627 ) — — ( 2,627 )

Deemed contribution for the modification related to Warrants issued in connection with Series 8 Preferred Stock 1,469 — — 1,469

Amortization premium- modification related to Series 8 Preferred Stock 2,627 — — 2,627

Net Loss Attributable to Common Stockholders $ ( 79,570 ) $ 29,175 $ ( 1,131 ) $ ( 51,526 )

Basic and diluted loss per share $ ( 34.12 ) $ ( 22.09 )

Weighted Average Shares Outstanding, basic and diluted 2,332,041 2,332,041

The following is a summary of the unaudited pro forma adjustments reflected in the unaudited pro forma consolidated financial statements based on preliminary estimates, which may change as additional information is obtained.

Reflects amounts reported by the Company within its Annual Report on Form 10-K for the year ended December 31, 2022.

Reflects the elimination of the Enterprise Apps Business assets, liabilities, and historical balances within the Company's consolidated financial statements that were discontinued as result of the Business Combination.

The Company notes $ 69 million of consideration was to be received by the Company in connection with the Business Combination.

The consideration was paid directly to the shareholders of the Company, and no adjustment was included in the unaudited pro forma consolidated balance sheet as a result.

Reflects adjustments for remaining cash contribution of $ 3.7 million to reach $ 10 million cash balance for Enterprise Apps Business in accordance with the Separation and Distribution Agreement.

Reflects adjustments to the Company's investment in Class A and Class B Units of Cardinal Ventures Holdings LLC, which has certain interests in the sponsor of KINS.

The Company distributed its ownership interests to certain employees and members of management on February 28, 2023 as a pre-requisite to the Business Combination.

Reflects adjustment for acquisition liability that is within the Enterprise Apps Business, but will be retained by the Company subsequent to the Enterprise Apps Spin-off.

Reflects the elimination of the historical revenue and expenses directly related to the Enterprise Apps Business that will not recur in the Company combined statement of operations as a result of the Enterprise Apps Spin-off.

Reflects management’s estimates of approximately $ 1.1 million of historical costs mainly for executive salaries and benefits in general and administrative expenses ($ 1.0 million) and sales and marketing expenses ($ 0.1 million) that were allocated to Enterprise Apps Business.

The historical costs were added back to the statement of operations for the year ended December 31, 2022 as the costs would be incurred by the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data